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Edited version of your written advice

Authorisation Number: 1012817575863

Ruling

Subject: Capital gains tax - non-resident - taxable Australian property - main residence exemption - absence choice

Question 1:

Will the sale of your home in Australia, whilst you are a non-resident be subject to capital gains tax (CGT) and constitute a CGT event?

Answer:

Yes.

Question 2:

Will any capital gain or capital loss made on the sale of your home in Australia be disregarded?

Answer:

Yes.

This ruling applies for the following periods:

Year ended 30 June 2015.

Year ended 30 June 2016.

The scheme commences on:

1 July 200X.

Relevant facts and circumstances

Your business visa was granted and then you and your spouse and child then arrived in Australia.

From sometime during 200X to 30 June 20XX you were a resident of Australia for taxation purposes.

From 1 July 2013 you became a non-resident of Australia for taxation purposes. You have lodged an income tax return for the year ended 30 June 2014 as a non-resident.

You purchased a 100% owned off-the-plan property (the property) and it was settled during the year ended 30 June 20XX.

You do not own any other properties in Australia. You own several properties overseas.

You moved into the property as your main residence sometime during the year ended 30 June 20XX (this was when the property was first ready to be occupied). It remained your main residence for a few years.

You have continued to treat the property as your continuing main residence (absence choice) from the time you physically moved out and will do so until the property is sold. As you have made this absence choice you do not treat any other dwelling (including those owned overseas) as your main residence. You have confirmed this in an email sent by your tax agent.

Your family (your spouse and child) have continued to live in the property and will continue to do so until the property is sold. Your spouse also nominates the property as their main residence from the time it was first occupied as your main residence until it is sold.

You plan to sell the property sometime in the year ended 30 June 2015.

The property has not been used to produce assessable income at any stage during your ownership period.

The following documents are to be read with and form part of the scheme for the purposes of this private binding ruling:

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 118-125

Income Tax Assessment Act 1997, Section 118-145(1)

Income Tax Assessment Act 1997, Section 118-145(2)

Income Tax Assessment Act 1997, Section 118-145(3)

Income Tax Assessment Act 1997, Section 118-145(4)

Income Tax Assessment Act 1997, Section 118-170

Income Tax Assessment Act 1997, Section 855-15

Income Tax Assessment Act 1997, Section 855-20

Reasons for decision

Question 1

Summary

CGT applies to a non-resident when they sell taxable Australian property.

Detailed reasoning

Non-residents are subject to CGT in Australia in relation to assets that are 'taxable Australian property'. Real property situated in Australia, such as a home is taxable Australian property.

CGT event A1 will happen when you sell the property and this will give rise to either a capital gain or a capital loss.

Question 2

Summary

Any capital gain or capital loss made on the sale of your home in Australia will be disregarded.

Detailed reasoning

Generally, you can disregard a capital gain or capital loss you make from a CGT event that happens to a dwelling that is your main residence for the entire period you own it.

In some cases you can choose to continue to treat a dwelling as your main residence even though you no longer live in it, including periods of absence. You can only make this choice for a dwelling you have first occupied as your main residence.

If you do not use the dwelling to produce income, you can treat the dwelling as your main residence for an unlimited period after you cease living in it.

If you make this choice you cannot treat any other dwelling as your main residence for that period.

To be entitled to a full main residence exemption, your spouse must also choose the same dwelling as their main residence.

In your circumstances, for the entire ownership period the dwelling has been your main residence or your continuing main residence. You established the dwelling as your main residence before making the continuing main residence choice and your spouse has also chosen to nominate the same dwelling as their main residence. The dwelling is not used to produce assessable income and will not be used to produce assessable income at any time up until it is sold. Therefore any capital gain or capital loss you make on the sale is disregarded.

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