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ARTICLE · 14 DECEMBER 2021

CGT implications of Granny Flat Arrangements

Bartier Perry Solicitors
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Depending on the circumstances, granny flat arrangements can provide mutual benefits to parents and their adult children.

AustraliaTax
Peter Kramer
Peter Kramer
Jeremy Tjeuw (Formerly With Bartier Perry)
Jeremy Tjeuw (Formerly With Bartier Perry)
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On 24 June 2021, the Treasury Laws Amendment (2021 Measures No. 4) Bill 2021 was enacted into law. The Act amended the Income Tax Assessment Act 1997 and Income Tax (Transitional Provisions) Act 1997 to provide a capital gains tax (CGT) exemption for "granny flat arrangements" in certain circumstances. The amendments are intended to ensure that CGT consequences are not an impediment to formalising granny flat arrangements and aim to reduce the risk of financial abuse and exploitation of older Australians and other vulnerable people.

The granny flat arrangement rules commenced on 1 July 2021.

Background

A "granny flat arrangement", derived from the term "granny flat" in the Social Security Act 1991 (Cth), generally describes an "assets for care" arrangement, where money or other consideration is given in exchange for a right to accommodation for life. Often, they involve an older person transferring their home or other assets to their adult child in exchange

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