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Edited version of private ruling
Authorisation Number: 1011589820614
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Ruling
Subject: capital gains tax (CGT) and main residence - absence choice
Is any capital gain made upon the disposal of your Australian dwelling disregarded?
Yes.
This ruling applies for the following period
Year ended 30 June 2011
The scheme commenced on
1 July 2010
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You and your spouse purchased a dwelling after 20 September 1985 with settlement occurring in the same year.
You moved into the dwelling as soon as practicable and resided in the dwelling as your main residence for several years.
You and your spouse moved permanently overseas.
You and your spouse are considered non residents for taxation purposes.
The dwelling is the only property you and your spouse have owned.
You and your spouse rented out the dwelling from the time you vacated the dwelling and the dwelling remains tenanted.
You and your spouse have made the absence choice and continue to treat the dwelling as your main residence.
You and your spouse intend the sell the dwelling within six months and before the six year maximum absence period expires.
You and your spouse will not move back into the dwelling before the dwelling is sold.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 855-15
Income Tax Assessment Act 1997 Section 855-20
Income Tax Assessment Act 1997 Section 104-10
Income Tax Assessment Act 1997 Section 104-160
Income Tax Assessment Act 1997 Section 118-110
Income Tax Assessment Act 1997 Section 118-145.
Reasons for decision
Capital gains tax and non-residents
Non-residents are only subject to CGT when a CGT event happens to taxable Australian property. Taxable Australian property is defined as real property situated in Australia.
Ordinarily, a non-resident taxpayer who makes a capital gain on the sale of taxable Australian property would include the capital gain in assessable income. However, the main residence exemption may apply to disregard any CGT applicable on disposal of the property.
Main Residence exemption
Generally, you can disregard a capital gain that you make on the sale of a dwelling that was your main residence for your entire ownership period.
In some cases you can continue to treat a dwelling as your main residence even though you no longer live in it. You can only make this choice for a dwelling that you have first occupied as your main residence. By choosing to do this, you are making an absence choice.
If you make this choice you cannot treat any other dwelling as your main residence for that period.
In your situation, you have chosen to treat the dwelling in Australia as your main residence for the period that you have not resided in it. Although the dwelling has been used to produce assessable income, the period that it has been used for this purpose will be less than six years. Therefore, any capital gain you make on disposal of the dwelling will be disregarded.
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