This is another update to an article we posted in April about the government’s proposal to exempt capital gains tax from granny flats: our team at Granny and Co Homes are happy to confirm that this proposal is now reality: vulnerable Australians – the elderly and those with a disability – will have access to a CGT exemption where a formal written granny flat arrangement is in place.

Granny flat arrangements are becoming increasingly common in Australia, a simple example is where one person provides consideration to receive accommodation for life, for example, funding the granny flat build on your adult child’s property in exchange for free accommodation. 

Up until now, many families have been avoiding formal agreements because of the CGT implications and this has led to situations of financial abuse and exploitation when there’s been a breakdown in their relationship… what are your rights if you have a falling-out with another family member on their property? What happens if and when that adult child (the property owner) becomes bankrupt or dies? 

A written agreement is necessary because it helps to formalise the living arrangement and protect the rights of both parties. Removing Capital Gains Tax from the equation will make it easier for older Australians & the disadvantaged to build granny flats with their families, improving opportunities for extended family living.

 

Last update: July 3rd, 2021. Stay tuned to Granny and Co Homes, we’ll post another update as this story develops!

Our sources:

• Explanatory Memorandum, Treasury Laws Amendment (2021 Measures No. 4) Bill 2021
• Linked-in post from Steve Grant, principal of Merthyr Law
• https://treasury.gov.au/consultation/c2021-161601
• https://www-accountantsdaily-com-au.cdn.ampproject.org/c/s/www.accountantsdaily.com.au/tax-compliance/15583-fbt-cgt-exemption-draft-legislation-surfaces/amp
• https://www.accountantsdaily.com.au/tax-compliance/12407-board-of-tax-to-review-granny-flat-tax-treatment