| Disclaimer This edited version has been archived due to the length of time since original publication.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: 1012958662496
Date of advice: 4 February 2016
Ruling
Subject: Capital gains tax - main residence exemption - absence choice
Question:
Is the capital gain or capital loss made on the disposal of your dwelling disregarded?
Answer:
Yes
This ruling applies for the following periods:
Year ending 30 June 2015
The scheme commenced on:
1 July 2014
Relevant facts
You acquired an interest in a dwelling in 2011 (the dwelling).
You moved into the dwelling as soon as practical after settlement and resided in the dwelling for a number of months.
You continued to treat the dwelling as your main residence during periods of absence.
You did not have another main residence during your ownership of the dwelling.
You sold the dwelling and settlement occurred in 2014.
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 118-145
Reasons for decision
Capital gains tax
Capital gains tax (CGT) is the tax you pay on any capital gain you make and include on your annual tax return. There is no separate tax on capital gains; it is merely a component of your income tax. You are taxed on your net capital gain at your marginal tax rate.
You make a capital gain or capital loss if a CGT event happens. The most common CGT event happens when you dispose of an asset to someone else, for example, if you sell or give away an asset.
A capital gain or capital loss will occur when a capital gains tax (CGT) event happens to a CGT asset. The most common CGT event is CGT event A1 which occurs when a CGT asset is disposed of.
Main residence exemption
Generally, you can fully disregard a capital gain or capital loss made on the sale of a dwelling that is your main residence if:
● the dwelling was your home for the whole period you owned it
● the dwelling was not used to produce assessable income, and
● any land on which the dwelling is situated is not more than 2 hectares.
Absence choice
In some cases, you can choose to treat a dwelling as your main residence even though you no longer live in it.
The absence provision allows a dwelling that is your main residence to continue to be treated as your main residence during a period of absence from the dwelling.