| Disclaimer This edited version has been archived due to the length of time since original publication.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 private advice
Authorisation Number: 1051661262743
Date of advice: 28 April 2020
Ruling
Subject: Capital gains tax
Question 1
Are the house and granny flat to be treated as separate properties for the purposes of section 118-110 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
No.
Question 2
Are you able to disregard any CGT in relation to the properties as per section 118-145 of the ITAA 1997?
Answer
Yes. The Commissioner considers that the property continued to be your main residence prior to its sale. The property was rented out for a period of time, this period of time was less than six years and the absence rule can apply. Accordingly, the property can be treated as your main residence for capital gains tax purposes for your entire period of ownership and you can disregard the gain made on its disposal. Further information about this discretion can be found by searching 'QC 52189' on ato.gov.au.
This ruling applies for the following period:
Year ended 30 June 2020
The scheme commences on:
1 July 2018
1 July 2019
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, a property (the property) with your spouse as joint tenants.
You both used the property as your main residence.
Your spouse passed away.
A granny flat was built at the rear of the property. The granny flat and the area used in conjunction with the granny flat represents approximately XX% of the total land area of the property.
The granny flat was fenced off from the main house with its own side access gate.
You arranged for the granny flat to have separate electricity and water bills
You did not subdivide the land and continued to receive one bill of land rates.
You moved into the granny flat and rented the main house under a lease.
The lease provided the tenants exclusive access of the main house and a single car port.
You continued the right to occupy the granny flat and use of an additional single car port.
A new lease was entered with new tenants. The new tenant obtained the same access as the previous lease and you maintained your access to the granny flat.
In XXXX, the tenants moved out of the main house.
You moved out of the granny flat and back into the main house.
The main house and the granny flat were both sold in one transaction on the XX XXXX 20XX.
You lived in the main house until the property sold and settled.
While you owned the property, you did not own any other properties.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-110
Income Tax Assessment Act 1997 section 118-115
Income Tax Assessment Act 1997 section 118-145