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Edited version of private ruling
Authorisation Number: 1011516197553
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Ruling
Subject: Capital gains tax - main residence exemption
Question:
Will the capital gain made on the disposal of your industrial property being vacant land, be disregarded under the main residence provisions?
Answer:
No.
This ruling applies for the following period:
Year ended 30 June 2010
The scheme commences on:
1 July 2009
Relevant facts and circumstances
You purchased a vacant block of land.
The block is an industrial property.
You did not build a dwelling on the block.
You have sold the vacant block.
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 and
Income Tax Assessment Act 1997 section 118-115.
Reasons for decision
Detailed reasoning
A capital gain or capital loss may arise if a capital gains tax (CGT) event happens to a CGT asset. A CGT asset is any kind of property, or a legal or equitable right that is not property.
The most common CGT event is CGT event A1 and this occurs when an entity disposes of the ownership interest in an asset. The sale of land would be considered to be a CGT event A1.
Under certain circumstances, you may be able to disregard a capital gain or capital loss that is made. A capital gain or loss you make from a CGT event happening to a CGT asset that is a dwelling, may be disregarded if you are an individual, the dwelling was your main residence throughout your entire ownership period and you did not use the dwelling to produce assessable income.
Except for the disposal of vacant land after the accidental destruction of a main residence, there is no exemption that allows for a capital gain or capital loss to be disregarded upon disposal of vacant land.
In your case, as your property was vacant land, you are not entitled to the main residence exemption and any capital gain made on the disposal of the land cannot be disregarded.