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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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 your written advice

Authorisation Number: 5010052129621

Date of advice: 1 August 2018

Ruling

Subject: Capital gains tax

Question 1

Will the main residence exemption be available from XXXX to XXXX?

Answer

Yes

Question 2

Will the full main residence exemption be available from XXXX to XXXX?

Answer

No

Question 3

Will the property continue to be your main residence from XXXX to XXXX?

Answer

Yes

Question 4

Are you taken to have acquired the dwelling for its market value at XXXX under the special rule in section 118-192 of ITAA 97?

Answer

Yes

This ruling applies for the following period(s)

Year ending 30 June XXXX

The scheme commences on

1 July XXXX

Relevant facts and circumstances

The property is situated.

The land was less than two hectares.

The property was originally purchased by a sole proprietor pre Capital Gains Tax (CGT).

This was their main residence.

Date of death was XXXX.

Under the terms of the Will, the spouse had the use and occupation of the dwelling for their lifetime. (Will supplied).

Market value at date of death was $XXXX.

The property was the main residence of spouse and their offspring/beneficiary.

Administrators were appointed for the beneficiary.

Due to beneficiary’s condition of intellectual impairment, there was a forced move into a residential support services from XXXX.

Spouse resided in this property as the main residence up to their death.

The property passed onto beneficiary as per Will.

The beneficiary always had the intention to return to the family home, however was unable to do so due to significant health issues.

The beneficiary currently resides at the supported residential accommodation.

The property was made available to rent and became income producing from XXXX.

The title of the property was transferred to beneficiary on XXXX.

The property sold.

The property settled.

Assumption(s)

Relevant legislative provisions

Income Tax Assessment Act 1997 (ITAA 97)

section 118-192 of ITAA 97

section 118-190 (1) of ITAA 97

section 118-145(2) of ITAA 97

Reasons for decision

Question 1

Will the main residence exemption be available from XXXX to XXXX?

Answer

Yes

Subdivision 118-B of the ITAA provides a CGT exemption for your main residence where the relevant requirements are met.

Under subsection 128-15 (2) of the ITAA 1997 you are taken to have acquired the property on the day your parent died.

The spouse had a right to occupy the residence under the Will of the deceased and resided in this property as their main residence up to their death.

Although you moved out of the property in XXXX, you chose to continue to treat it as your main residence under section 118-145 of the ITAA 1997.

Hence there is a main residence exemption for this property from XXXX to XXXX.

Question 2

Will the full main residence exemption be available from XXXX to XXXX?

Answer

No

Under Subsection 118-190 (1) of the ITAA of 1997, you get only a partial exemption for a CGT event that happens in relation to a dwelling or your ownership interest in it if

As the property was rented out from XXXX until XXXX, the full main residence exemption will not apply.

Question 3

Will the property continue to be your main residence from XXXX to XXXX?

Answer

Yes

Section 118-145(2) of ITAA 1997 states that if you use the part of the dwelling that was your main residence for the purpose of producing assessable income, the maximum period that you can treat it as your main residence under this section while you use it for that purpose is 6 years.

Therefore you are able to treat the property as your main residence the XXXX to XXXX.

Question 4

Are you taken to have acquired the dwelling for its market value at XXXX under the special rule in section 118-192 of ITAA 97?

Answer

Yes

Under section 118-192 of ITAA 1997, you are taken to have acquired the entire property for its market value as at the date the property was first used to produce income, therefore you are eligible for the special rule under this provision.

When calculating your capital gain the total days of ownership are from XXXX to XXXX. Your non main residence days are from XXXX to XXXX.

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