Edited version of private advice

Authorisation Number: 1052030679733

Date of advice: 12 October 2022

Ruling

Subject: CGT - disposal - main residence - absence choice

Question

Can you disregard the capital gain that you made on the disposal of your Dwelling?

Answer

Yes.

A capital gain or capital loss you make from a capital gains tax (CGT) event that happens in relation to a CGT asset that is a dwelling or your ownership interest in it is disregarded if:

(a)          you are an individual; and

(b)          the dwelling was your main residence throughout your ownership period; and

(c)           the interest did not pass to you as a beneficiary in, and you did not acquire it as a trustee of, the estate of a deceased person.

Having considered the relevant factors the Commissioner accepts that you moved into the Dwelling as soon as practicable after settlement, and that you occupied the dwelling as your main residence. You made the choice to continue to treat the Dwelling as your main residence after you moved out, before returning to live in the Dwelling once again.

The Dwelling was also your main residence for the period between XX January 20XX and XX January 20XX in accordance with the changing main residences rules.

Therefore, the time that you resided in the Dwelling as your main residence, together with the choices that you made after you moved out, covered your entire ownership period.

Further information about the main residence exemption can be found by searching 'QC 69710' on ato.gov.au

This ruling applies for the following period:

Year ending 30 June 2022

The scheme commences on:

1 July 2012

Relevant facts and circumstances

In November 20XX you purchased a property in Suburb A in Australia (the Property).

Settlement occurred a short time later.

At the time you purchased the Property, you were living with your parents in their home in Suburb B.

You were working at a School in Suburb C prior to moving to Suburb A. This was not a permanent role.

The day after settlement occurred, your family helped you to move all of your belongings from your parents' home into your new home (the Dwelling).

The water to the Dwelling was connected in your name.

You did not need to have internet connected to the Dwelling as you had sufficient coverage on your mobile phone plan.

The previous owners had not yet disconnected the gas or electricity. You were able to live in the Dwelling while exploring the electricity and gas providers. You made several calls to different companies such as Origin and AGL during the period you resided in the Dwelling.

You attempted to gain employment at a School in Suburb A but you were unsuccessful. They only had some casual days on offer.

After you had moved into the Dwelling, you were offered a temporary contract at the School in Suburb C for the new school year. You accepted this contract given you were unsuccessful in getting work at the closer option in Suburb A. Later that year you were made permanent through a merit selection process.

On XX January 20XX your cousin moved from Country A to live with you in the Dwelling. Your cousin had planned to find employment and contribute to your bills and living expenses.

They had trouble finding work in Suburb A due to restrictions with their working holiday visa, and realised they would have to move closer to the city to obtain employment.

As you now had a long commute to work each day, and did not have the financial support from your cousin, you decided that you needed to move out of the Dwelling and back in with your parents in Suburb B. Their home was much closer to your place of work in Suburb C.

You moved out of the Dwelling and it was rented out.

You made the choice to continue to treat the Dwelling as your main residence after you moved out.

The Dwelling remained rented for a number of years, at which point you moved back into the Dwelling.

Several years later you purchased a new property and moved into it.

Two weeks later settlement occurred for the sale of the Dwelling.

You have made a capital gain on the sale of the Dwelling.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-110

Income Tax Assessment Act 1997 section 118-135

Income Tax Assessment Act 1997 section 118-140

Income Tax Assessment Act 1997 section 118-145

Income Tax Assessment Act 1997 Part 3-1

Income Tax Assessment Act 1997 Part 3-3