The Morrison Government has announced that there will be a capital gains tax exemption for granny flats.
Treasurer, Josh Frydenberg, and Minister for Housing, Michael Sukkar, announced the exemption on October 5.
Under the measure, capital gains tax will not apply to the creation, variation or termination of a formal written granny flat arrangement providing accommodation for older people or those with disabilities.
The measure will commence from July 1, 2021, subject to the passing of legislation.
This change will only apply to agreements that are entered into because of family relationships or other personal ties, and will not apply to commercial rental arrangements.
When faced with a potentially significant capital gains tax liability, families might opt for informal arrangements which can leave open the risk of financial abuse and exploitation, for example, following a family or relationship breakdown.
This measure is consistent with the government’s National Plan to Respond to the Abuse of Older Australians announced on March 19, 2019, the Board of Taxation’s Review of Granny Flat Arrangements, and the 2017 Australian Law Reform Commission’s Report, Elder Abuse a National Legal Response.
As part of the 2020-21 Budget, this will boost the construction industry, stimulate demand for new housing and support trades jobs at a time when the economy needs it most.
Source:
Media release, Oct 5
Offices of the Federal Treasurer and Minister for Housing