Edited version of your private ruling

Authorisation Number: 1012447056040

Ruling

Subject: Capital gains tax - disposal of intended main residence

Question:

Is the capital gain or capital loss you made on the disposal of your dwelling disregarded?

Answer:

No.

This ruling applies for the following period

Year ended 30 June 2013

The scheme commenced on

1 July 2012

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You had been the local minister in charge of a parish more than 30 years.

Prior to this appointment you had been an assistant minister in a number of other parishes.

All parish appointments require the appointee to reside full-time at the presbytery within the relevant parish. The presbytery is fully furnished by the parish, although you did own small pieces of furniture which you used in the presbytery.

You resided full-time at the presbytery since your appointment.

More than 20 years ago you purchased a dwelling where you intended to retire to once you were unable to fulfil your Diocesan appointment.

At the time of purchase of the dwelling your parent and your siblings resided in surrounding suburbs. Your parent has recently passed away but a number of siblings still reside in the area.

Shortly after settlement you moved furniture into the dwelling and you have continued to furnish it.

All utilities, council rates and insurance are registered in your name. You pay all costs associated with the dwelling.

For the first specified years of your ownership you regularly resided at the dwelling during your annual holidays and you would also spend your one day off per week, there.

Normally, you would drive to the dwelling on the evening before your day off, stay overnight and play a sport at the local club where you have been a member for approximately X years on your day off.

For a specified number of years you have allowed members of a local parish office bearer's family reside in the dwelling rent-free whilst they were studying.

You have paid all expenses during this time with the occupier reimbursing you for gas, power and water usage.

The dwelling has never been used to produce assessable income.

Last year you retired and you are currently residing in rented accommodation which is paid for by the church in your former parishes' location.

You are going to dispose of the dwelling prior to the end of this financial year and purchase a property in the area you are currently residing in.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 104-10

Income Tax Assessment Act 1997 Section 118-110

Income Tax Assessment Act 1997 Section 118-135

Income Tax Assessment Act 1997 Section 118-145

Reasons for decision

While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.

The most common CGT event is a CGT event A1 which occurs when you dispose of a CGT asset. The time of the event is when you enter into the contract for the disposal or if there is no contract when the change of ownership occurs.

Main residence

Generally, you can ignore a capital gain or capital loss from a CGT event that happens to your ownership interest in a dwelling that is your main residence. To get the full exemption:

· the dwelling must have been your home for the period you owned it

· you must not have used the dwelling to produce assessable income, and

· any land on which the dwelling is situated must be two hectares or less.

The term main residence is not defined for CGT purposes, so it takes its ordinary legal meaning, which is based on an analysis of how you use each of the residences that is available to you.

At times when only one residence is available for you to use, that residence is your main residence. Where more than one residence is available to you, then factors such as the following are taken into account to reach a conclusion about which of them is your main residence:

· the length of time that you have actually resided in the dwelling

· whether you moved your personal belongings into the dwelling

· the address to which you have your mail delivered

· your address on the electoral roll

· the connection of services such as telephone, gas and electricity, and

· your intention in occupying the dwelling.

A mere intention to occupy a dwelling as a main residence, but without actually doing so, is insufficient to obtain this main residence exemption. You must actually occupy the dwelling.

In some cases, you can choose to treat a dwelling as your main residence even though you no longer live in it. You cannot make this choice for a period before a dwelling first becomes your main residence.

Although, you had all utilities, council rates and insurance are registered in your name and you stayed at the dwelling each week on your day off as well as spending your holidays there for a specified number of years of your ownership period, we consider it to be a holiday house. You never moved in and established it as your main residence and you now have no intention of establishing it as your main residence.

We consider that you established the presbytery and now your rented accommodation in the same area as your main residence as this is where you had and now have all your personal belongings and you continue to reside there.

Therefore, you are not entitled to claim the main residence exemption on the disposal of the dwelling as it has never been your main residence.

As you acquired your interest in the dwelling prior to 21 September 1999, you can use either the indexation or discount method to calculate your capital gain or capital loss.