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Edited version of private advice
Authorisation Number: 1051849275760
Date of advice: 11 June 2021
Ruling
Subject: Capital gains tax - becoming an Australian resident
Question
Does section 855-45 of the Income Tax Assessment Act 1997 (ITAA 1997) apply so that the first element of the cost base of the foreign rental property is taken to be the market value when you became a tax resident of Australia?
Answer
Yes. When you became an Australian resident for tax purposes, section 855-45 of the ITAA 1997 applied so that the first element of the cost base of the foreign property was taken to be its market value at the time you become a resident. Further, the general capital gains tax provisions apply to the property as if you had acquired it at the time you became an Australian resident.
This ruling applies for the following period periods:
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You own a dwelling in a foreign country (the dwelling).
You purchased the dwelling as an investment property while you were a resident of the foreign country.
You rented the dwelling out as soon as you were able.
You relocated to Australia several years ago and became a tax resident of Australia at that time.
The foreign property has continued to be rented out since you took up residence in Australia.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 855-45