ATO Interpretative Decision

ATO ID 2003/378 (Withdrawn)

Income Tax

Capital gains tax: main residence exemption - marriage breakdown
FOI status: may be released

This ATO ID is withdrawn as it is a simple restatement of the law and does not contain an interpretative decision.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Status of this decision: Decision Withdrawn 12 March 2010

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

If a dwelling acquired by a company on or after 20 September 1985 is transferred to a person following their marriage breakdown and roll-over was available to the company under Subdivision 126-A of the Income Tax Assessment Act 1997 (ITAA 1997), is the person entitled to a main residence exemption for the period that the dwelling was owned by the company?

Decision

No. Although the person is taken for the purposes of the main residence exemption in Subdivision 118-B of the ITAA 1997 to have owned the dwelling when it was owned by the company, subsection 118-180(2) of the ITAA 1997 specifies that the dwelling cannot be treated as the person's main residence during that period.

Facts

A company acquired a property (consisting of land and a dwelling) after 19 September 1985. The taxpayer and their spouse (who together owned all of the shares in the company) lived in the dwelling.

The taxpayer's marriage broke down. The taxpayer continued to live in the dwelling.

As a result of a court order under the Family Law Act 1975, the company transferred the property to the taxpayer. The taxpayer continued to live in the dwelling until they sold the property.

The taxpayer made a capital gain from the sale of the property.

Reasons for Decision

Subsection 118-180(1) of the ITAA 1997 treats a dwelling acquired by a taxpayer from a company or trustee as a result of marriage breakdown, as if it were owned by the taxpayer during the period when it was actually owned by the company or trustee if:

•: the dwelling was acquired by the company or trustee on or after 20 September 1985; and
•: marriage breakdown roll-over was available to the company or trustee under Subdivision 126-A of the ITAA 1997.

However, in these circumstances a dwelling cannot be treated as the taxpayer's main residence during the period when it was owned by the company or trustee, even if the taxpayer lived in the property when it was owned by the company or trustee (subsection 118-180(2) of the ITAA 1997).

As a result, the dwelling can only be treated as the taxpayer's main residence for the period from when the taxpayer actually owned the property.

This means that, on a subsequent disposal by the taxpayer, the dwelling will only qualify for a partial exemption in accordance with section 118-185 of the ITAA 1997, as the dwelling is not taken to be the taxpayer's main residence throughout the taxpayer's ownership period.

Date of decision: 15 November 2002

Year of income: Year ended 30 June 2002

Legislative References:
Income Tax Assessment Act 1997
   Subdivision 118-B
   section 118-180
   subsection 118-180(2)
   section 118-185
   Subdivision 126-A

Family Law Act 1975
The Act

Keywords
CGT roll-over relief
Company tax
CGT main residence exemption
CGT marriage breakdown

Business Line: Losses and Capital Gains Tax Centre of Expertise

Date of publication: 23 May 2003

ISSN: 1445-2782

history

	Date:	Version:
	15 November 2002	Original statement
You are here →	12 March 2010	Archived

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