In the context of tenants in common, TR 97/4 states that roll-over relief will be available for tenants in common who subdivide land and a building under a strata title law if two or more persons:
(a) hold an asset in relation to land, being land and a building, as tenants in common; and
(b) enter into an agreement or understanding, whether evidenced in writing or not, which grants each tenant in common an exclusive right of occupation, use and enjoyment of a particular stratum unit; and
(c) subdivide the land and building into relevant stratum units (note that this only applies to strata title properties and does not apply to other forms of land title, including Torrens title);and
(d) then transfer their interests as tenants in common and rights over their particular stratum unit so that each tenant in common becomes the registered proprietor of the relevant stratum unit which corresponds with that stratum unit; and
(e) elect that the roll-over relief in former S.160ZZPG (2) applies (now S.124-190).
According to TR 97/4, the roll-over relief provision is sufficiently wide in its terms to potentially apply to newly constructed buildings (whether residential or otherwise). For these purposes, 'building' includes any residential (home unit), commercial or industrial building consisting of two or more self-contained dwellings or commercial or industrial premises.
If the roll-over relief applies, then any capital gain or loss from the disposal of interests in the land and/or buildings (and rights to occupy, use and enjoy a particular stratum unit held by a tenant in common before subdivision) is disregarded.
If the tenant in common acquired their interest as a tenant in common and rights before 20 September 1985, the relevant stratum unit is treated as having been acquired by the person before 20 September 1985. If the interest as a tenant in common and rights were acquired on or after 20 September 1985, the person is treated as having paid for the relevant stratum unit, an amount equal to the relevant cost base attributable to that person's interest in the tenancy in common and rights as at the time of the transfer of the interests and rights. Refer to S.124-10. Note, where the land is held as trading stock, roll-over relief for a strata title subdivision would not be useful as any capital gain made on partitioning the land would be disregarded under S.118-25.
Note that stamp duty relief may also be available, depending on the State or Territory in which the partition takes place, to the extent each tenant acquires an interest in a lot that is equivalent in value to the value of their interest as tenant in common (e.g., refer to Ruling DA.017 for Victoria).