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Edited version of private ruling

Authorisation Number: 1011623932991

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Ruling

Subject: Capital gains tax (CGT)

Are you entitled to disregard any capital gain or loss made on disposal of your unit?

No.

This ruling applies for the following period:

Year ended 30 June 2011

Year ended 30 June 2012

Year ended 30 June 2013

Year ended 30 June 2014

The scheme commenced on:

1 July 2010

Relevant facts and circumstances

You and your spouse live in a State or Territory.

You jointly own a dwelling in that State or Territory which you consider to be your main residence.

Your spouse works in another State or Territory and frequently returns home.

With your spouse, you jointly purchased a unit in the other State or Territory to provide your spouse with a place to stay whilst he is there for work.

The unit has never been rented out to third parties and no rental income has been received.

You are seriously contemplated selling the unit in the foreseeable future.

Relevant legislation provisions:

Income Tax Assessment Act 1997 Section 102-20.

Income Tax Assessment Act 1997 Section 104-10.

Reasons for decision

Capital gains tax

You make a capital gain or a capital loss if and only if a CGT event happens to a CGT asset (section 102-20 of the Income Tax Assessment Act 1997 (ITAA 1997)).

Under section 104-10 of the ITAA 1997, the disposal of a CGT asset causes a CGT event A1 to happen. You dispose of an asset when a change of ownership interest occurs from you to another entity. The disposal of a residential unit is a CGT event A1.

CGT exemptions

There are exemptions that allow a capital gain or loss to be disregarded. The one most relevant to your circumstances is the main residence exemption. Under the main residence exemption, any capital gain or loss you make from a CGT event that happens to a dwelling is disregarded if the dwelling was your main residence throughout the period you owned it. If you own multiple properties, you may only claim the main residence exemption on one property at a time.

In your case, you have stated that you own a dwelling in a State or Territory which you consider to be your main residence. Therefore, as you cannot claim a main residence exemption on more than one property at a time, you cannot also apply this exemption to any capital gain or loss made on disposal of your unit in the other State or Territory.

Accordingly, as a CGT event A1 will occur when you sell the unit in the other State or Territory and a main residence exemption will not apply, any capital gain or loss made on the sale cannot be disregarded.

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