Edited version of private advice

Authorisation Number: 1052248009756

Date of advice: 8 May 2024

Ruling

Subject: CGT - main residence

Question 1

Are you eligible to make the choice under section 118-150 of the Income Tax Assessment Act 1997 (ITAA 1997) in relation to the dwelling located at XXXX?

Answer

Yes.

Subsection 118-150(3) of the ITAA 1997 states that you are only eligible to make this choice if:

•         a dwelling on the land that you construct, repair or renovate becomes your main residence (except because of section 118-147) as soon as practicable after the work is finished; and

•         it continues to be your main residence for at least 3 months..

The Commissioner is satisfied based on the facts you have provided you have met these eligibility conditions.

Question 2

Will the Commissioner exercise his discretion to extend the four year period in accordance with paragraph 118-150(4)(a) of the ITAA 1997?

Answer

Yes.

Based on the facts you have provided, we consider there have been circumstances outside your control which prevented you from completing the building of your dwelling within the four year period. Notably, you first contracted a builder a significant length of time before the expiry of the four year period but the builder pulled out of the contract. Then it took some time for you to be able to find a builder willing to construct on a site without services such as electricity and water. After a replacement builder was engaged, there were further issues after a disagreement between you and the builder. You moved into the dwelling approximately five months after the expiry of the four year period. Having regard to all your circumstances, it is considered appropriate for the Commissioner to exercise the discretion provided under paragraph 118-150(4)(a) of the ITAA 1997.

This ruling applies for the following periods:

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commenced on:

DD MM 20YY

Relevant facts and circumstances

You purchased some land. The contact date for the purchase of the land was DD MM 20YY, with settlement occurring on DD MM 20YY. There was no existing dwelling on the land at the time of purchase.

At the time you purchased the land, you were living overseas.

The property contains multiple lots. The dwelling was constructed on a lot which has a street address of XXXX.

In MM 20YY, you entered into a contract with a builder to construct a dwelling on the land. The builder withdrew from the contract shortly after.

You attempted to locate another builder to construct the dwelling.

In MM 20YY you entered into a contract with a second builder. Shortly after, they began construction on your dwelling.

In MM 20YY there was a disagreement between you and the builder.

Following the dispute, they abandoned the construction. The construction wasn't fully completed at that time, and keys were not returned.

You have lodged a dispute with the relevant government organisation regarding this matter, and the matter is still outstanding at the time of the issue of this ruling.

The next month, you engaged a locksmith to regain access to the uncompleted dwelling.

You moved into the dwelling on DD MM 20YY.

You engaged various tradespersons to complete the outstanding construction works, which were completed in MM 20YY.

You began receiving your mail at the dwelling shortly after.

The certificate of occupancy for the dwelling was issued on DD MM 20YY.

The dwelling has not been used to produce assessable income since you moved in.

After representations to the relevant state government body, you were granted a principal private residence exemption for the 20YY and 20YY land tax years.

You did not own any other residential property in Australia from when you acquired the property in question.

The dwelling and adjacent land is being compulsorily acquired.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-150