Edited version of private advice

Authorisation Number: 1052249037156

Date of advice: 10 July 2024

Ruling

Subject: CGT - main residence exemption

Question 1

Did CGT event A1 occur for you when the property was sold during the 20XX-XX income year?

Answer

Yes.

The owner of a CGT asset experiences CGT event A1 upon its disposal. Considering all relevant facts and circumstances, it is determined that you, as the owner of the Property, experienced CGT event A1 when the property was sold on your behalf during the 20XX-XX income year.

Question 2

Are you able to claim the main residence exemption for the sale of the property under section 118-110 of the Income Tax Assessment Act 1997?

Answer

Yes.

Throughout your ownership period, you either resided in the Property or choose to treat it as your main residence for CGT purposes using the absence rule. As a result, you are entitled to a full main residence exemption when selling the property.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commenced on:

XX XX 20XX

Relevant facts and circumstances

On XX XX 19XX the Deceased purchased the Property.

In XX 19XX the Deceased sold the property pursuant to a written terms contract dated XX XX 19XX.

According to the particulars of sale:

•                     The Deceased was listed as the vendor and you as purchaser.

•                     The method of payment was by consecutive weekly payments of $XXX with the first payment to be made on or before XX XX 19XX and weekly thereafter until the residue is paid in full.

You commenced making weekly payments under the contract, in about XX 19XX until shortly prior to the Deceased's death.

The solicitor for the Deceased advised them not to transfer the title until such time where the remaining balance was paid in full.

On XX XX 19XX you lodged a caveat on the property, as the purchaser, to protect your interest in the property prior to the title being transferred.

You treated the Property as your principal place of residence from the contract date until its sale.

The Property has never been used to generate assessable income.

On XX XX 19XX the Deceased passed away.

Shortly prior to the Deceased's death the Deceased waived the remaining balance under the contract in favour of you.

The Deceased left a will dated XX XX 19XX.

On XX XX 20XX State Trustee Limited (STL) obtained Grant of Probate for the estate of the Deceased.

Due to your health issues, STL also acts as administrator for your financial affairs pursuant to a tribunal order.

As per the Will, the Deceased made specific provisions for all assets where they held an ownership interest for the benefit of their family.

The Will does not make mention of the Property.

To avoid the costs and delay of litigation, the beneficiaries reached an agreement to resolve your ownership claim over the property.

On XX XX 20XX a Deed of Family Arrangement was signed by the beneficiaries and STL.

The Deed states:

The beneficiaries jointly acknowledge and accept your claim and agree to forgo and forfeit any right or entitlement that they have or may have in the estate of the deceased or the Property.

The beneficiaries jointly consent to STL (in its capacity as executor of the estate of the deceased) transferring all the right and title in the Property to you absolutely for your sole enjoyment, use and benefit.

A Register search conducted on XX XX 20XX states the sole proprietor of the property as STL as the executor(s) of the Deceased.

The Property was sold on XX XX 20XX.

The contract for the sale shows the vendor as STL as Legal Personal Representative of the Deceased's estate. STL states that this was only because title to the property was still in the name of the estate but that the estate had no beneficial ownership interest in the property. STL states that they were acting on your behalf when they sold the property.

Settlement occurred on XX XX 20XX.

All the sale proceeds are being held for your benefit.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 104-10

Income Tax Assessment Act 1997 section 106-50

Income Tax Assessment Act 1997 section 118-110

Income Tax Assessment Act 1997 section 118-125

Income Tax Assessment Act 1997 section 118-130