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This edited version has been archived due to the length of time since original publication.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 private ruling

Authorisation Number: 1012468349335

Ruling

Subject: CGT - main residence exemption

Question and answer

Are you entitled to a main residence exemption on the sale of your property?

No.

This ruling applies for the following periods:

Year ended 30 June 2013

The scheme commenced on:

1 July 2012

Relevant facts and circumstances

In 20XX you and your family moved from Location X to Location Y to commence building a dwelling.

It was your intention that this dwelling be your main residence once it was completed.

While building your dwelling in Location Y you were living in a rental property and your children were enrolled in the local school.

In the relevant year you and your family returned to Location X for medical reasons.

You are planning to sell the dwelling in Location Y to finance your move back to Location Y. Neither you, nor your spouse, have lived in the dwelling in Location Y.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-110.

Reasons for decision

Pursuant to section 118-110 of the Income Tax Assessment Act 1997 (ITAA 1997), a capital gain or capital loss made from a CGT event in respect of a dwelling that is your main residence can be disregarded in certain circumstances.

The Guide to Capital Gains Tax 2011-12 on the ATO's website (www.ato.gov.au) outlines some of the criteria used in determining if a dwelling is an individual's main residence, and are as follows:

    · the length of time the taxpayer has lived in the dwelling;

    · the place of residence of the taxpayer's family;

    · whether the taxpayer has moved his or her personal belongings into the dwelling;

    · the taxpayer's intention in occupying the dwelling.

In addition to these criteria, the Guide to Capital Gains Tax 2011-12 states that an intention to construct a dwelling as a main residence is insufficient to obtain the main residence exemption; you must actually occupy the dwelling.

In your circumstances, you moved from Location X to Location Y with the intention of constructing a dwelling that would become your main residence. However, in the relevant year you and your family returned to Location X for medical reasons. Neither you, nor your spouse, have lived in the dwelling in Location Y. Therefore, you are not entitled to the main residence exemption when you dispose of the property.

While we appreciate your particular circumstances, the tax law does not provide the Commissioner of Taxation with any discretion to allow you to apply the main residence exemption where it would not otherwise be available to you.


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