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Edited version of your written advice
Authorisation Number: 1012978807657
Date of advice: 1 March 2016
Ruling
Subject: capital gains tax
Question 1
Are you partially exempt from paying capital gains tax on the disposal of your property?
Answer
Yes.
This ruling applies for the following periods:
Year ending 30 June 2015
The scheme commences on:
1 July 2014.
Relevant facts and circumstances
In 19XX you purchased an interest in a unit.
In 20XX you purchased the remaining interest in the unit.
This unit was rented out from 19XX until 20XX.
In 20XX, you moved into the unit. It was your main residence from this time until it was sold.
In 20XX you entered into a contract to sell the unit.
Relevant legislative provisions
Income Tax Assessment Act 1997 - Section 102-20 and
Income Tax Assessment Act 1997 - Section 118-110.
Reasons for decision
Section 102-20 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that a capital gain or capital loss results from a CGT event occurring. The most common CGT event, event A1, occurs when you dispose of a CGT asset to someone else and a CGT asset includes real property.
Under section 118-110 of the ITAA 1997, you can disregard any capital gain or capital loss from a CGT event that happens to a dwelling that is your main residence for the entire period you owned it under certain circumstances. If a CGT event happens to a dwelling you acquired on or after 20 September 1985 and that dwelling was not your main residence for the whole time you owned it, you may be eligible for a partial exemption. You are only able to treat one dwelling as your main residence at any one time (apart from limited circumstances where you are changing main residences).
In your case, you are eligible for a partial exemption based on the fact that you first moved into the property in 20XX. It is at this point that it can be considered to have become your main residence.
The part of the capital gain that is taxable is calculated as follows:
Total capital gain made |
x |
number of days in your ownership period |