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Edited version of private ruling
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Ruling
Subject: Capital gains tax - becoming an Australian resident - absence choice - disposal of dwelling
Is any capital gain or capital loss made on the disposal of your overseas 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
You came to Australia as a temporary resident after 20 September 1985.
A number of months later, your relative passed away. Under the terms of your relative's Will, you were bequeathed their main residence located in an overseas country.
You had resided in the dwelling before you came to Australia.
A number of years later, you became an Australian resident.
The dwelling has not been rented out during your ownership period.
You reside to the dwelling when you travel to the country where it is located, and have made the absence choice in relation to the dwelling.
You intend disposing of the dwelling during the 2010-11 income year.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 102-20
Income Tax Assessment Act 1997 Section 104-10
Income Tax Assessment Act 1997 Section 118-110
Income Tax Assessment Act 1997 Section 118-145
Income Tax Assessment Act 1997 Section 855-45
Reasons for decision
Capital gain tax (CGT) exemption
You may make a capital gain or capital loss as a result of a CGT event happening. The most common event (CGT event A1) happens if you dispose of a CGT asset to someone else. In this situation, CGT event A1 will happen on the sale of your property overseas.
As a general rule, you disregard any capital gain or capital loss realised on the disposal of your interest in a dwelling that was your main residence for all of your ownership period.
In your case, you inherited a dwelling located in an overseas country in which you resided before coming to Australia as a temporary resident. You reside in this dwelling when you return to the overseas country and it has not been used to produce assessable income during your ownership period.
You have made the absence choice to continue treating the overseas dwelling as your main residence, and the fact that you have spent time living in Australia does not preclude you from making this choice. Therefore, as you have met the conditions required for the main residence exemption to apply to your situation, you disregard any capital gain or capital loss made on the disposal of the overseas dwelling.
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