| Disclaimer You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private advice
Authorisation Number: 1051784939525
Date of advice: 02 December 2020
Ruling
Subject: Property ownership and CGT main residence exemption
Question 1
Will the sale of the property result in a capital gains tax (CGT) event for Individual A?
Answer 1
Yes
CGT event A1 happens when you dispose of a CGT asset. The beneficial owner of the CGT asset will be liable to determine the capital gain or loss from the event. We accept the beneficial owners are different to the legal owner. The beneficial owners since the property was acquired are Individual B and Individual A. When the property is disposed of CGT event A1 will occur for the beneficial owners. Further information on a beneficial owner can be found in Taxation Determination TD 2017/11.
Question 2
Is Individual A eligible to apply the main residence exemption when the property is sold?
Answer 2
Yes
The main residence exemption applies to disregard a capital gain or capital loss where an individual owns the dwelling and occupies it as their principal place of residence throughout their ownership period. As shown in question one above, Individual A is the beneficial owner of the property and a CGT event happens for them when the property is sold. The property has been Individual A's principal place of residence in their ownership period therefore a capital gain or capital loss they make from the property sale will be disregarded under the main residence exemption
This ruling applies for the following period:
Year ended 30 June 20XX
The scheme commences on:
XX XXXX 20XX
Relevant facts and circumstances
The Property was purchased on XX XXXXX 20XX, the legal ownership in the names of Individual C and Individual D.
The Property was bought for the beneficial ownership of Individual A and Individual B as joint tenants.
The receipts for the deposit of the property are in the name of Individual A and Individual B.
Individual A and Individual B resided in the Property for the duration of their ownership, as their main residence.
A contract to sell the Property was entered into on XX XXXX 20XX
Individual B passed away on XX XXXX 20XX.
Individual A inherited all of Individual B's estate as per Individual B s final Will and testament.
The sale of the Property was settled on XX XXXX 20XX
Relevant legislative provisions
Section 104-10 of the Income Tax Assessment Act 1997
Section 118-145 of the Income Tax Assessment Act 1997
Section 128-50 of the Income Tax Assessment Act 1997
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
