Disclaimer
This edited version has been archived due to the length of time since original publication.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: 1012938467639

Date of advice: 18 January 2016

Ruling

Subject: Capital gains tax

Question and answer

Can the Commissioner extend the 6 month period for exemption of two main residences under section 118-140?

No.

This ruling applies for the following period:

Year ended 30 June 2015

The scheme commenced on:

1 July 2014

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 purchased property A a number of years ago.

Property A was put solely into your name after a property settlement.

You signed a contract to purchase property B.

You were not able to move into Property B for a number of months.

A contract for the sale of Property A was signed a number of months after Property B was purchased and you moved into it.

This contract failed and you were required to put Property A back on the market.

Property A was sold a couple of months later.

Relevant legislative provisions:

Income tax Assessment Act 1997 Section 118-140.

Reasons for decision

You make a capital gain or loss as a result of a capital gains tax (CGT) event happening to a CGT asset. CGT assets include real estate acquired on or after 20 September 1985. CGT events are those transactions that occur to a CGT asset that result in you either making a capital gain or capital loss.

You make a capital gain if your capital proceeds from the sale of a CGT asset are greater than the cost base for the purchase of that asset, for example, if you receive more for an asset than you paid for it.  

You make a capital loss if your reduced cost base for the purchase of that asset is greater than the capital proceeds resulting from the sale of that asset, for example, if you receive less for an asset than you paid for it.

Capital gains tax is not a separate tax, it forms part of your assessable income and is taxed at your marginal tax rate.

Changing Main Residences 

Section 118-140 (1) of the ITAA 1997 states that if you acquire an ownership interest in another property and intend to use it as your main residence,

You are able to treat your original property and your newly acquired property as your main residences for a maximum period of six months. 

Section 118-140 (2) of the ITAA 1997 states that the exemption outlined in section 118-140 (1) of the ITAA 1997 only applies if: 

    (a) Your original main residence was your main residence for a minimum of 3 months in the 12 months prior to the disposal of it, and

    (b) You did not use it to produce assessable income in any part of those 12 months when it was not your main residence.

In your case you held Properties A and B for longer than 6 months as set out in Section 118-140.

The Commissioner does not have any discretion under the legislation to allow you a full main residence exemption on properties A and B.