Edited version of private advice

Authorisation Number: 1052326302294

Date of advice: 8 November 2024

Ruling

Subject: Residency - main residence exemption

Question 1

Are you an Australian resident for taxation purposes?

Answer

Yes.

For tax purposes, you are a resident of Australia if you meet at least one of the following tests. You are not a resident of Australia if you do not meet any of the tests.

The resides test (otherwise known as the ordinary concepts test)

•         The domicile test

•         The 183 day test

•         The Commonwealth superannuation fund test.

We have considered your circumstances, and conclude that you are a resident of Australia for 2024 income year, as follows:

•         You are a resident of Australia according to the resides test.

•         You do not meet the domicile test because your domicile is not in Australia and the Commissioner is satisfied that your permanent place of abode is outside Australia.

•         You do meet the 183 day test because you were in Australia for 183 days or more during the 2024 income year.

•         You do not fulfill the requirements of the Commonwealth Superannuation test.

Question 2

Can you apply the main residence exemption provided under section 118-110 of the Income Tax Assessment Act 1997 (ITAA 1997) to disregard the capital gain or loss on the sale of the property?

Answer

Yes.

Paragraph 1.22 of the Explanatory Memorandum to the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Bill 2019 indicates that individuals who are both Australian residents and temporary residents for taxation purposes are not excluded from obtaining the main residence exemption.

As such, the facts and circumstances relating to your ownership of the property satisfy the provisions of section 118-110 of the ITAA 1997. Therefore, you can apply the full main residence exemption to disregard the capital gain or loss on the sale of the property.

This ruling applies for the following period:

Year ended 30 June 20xx

The scheme commenced on:

1 July 20xx

Relevant facts and circumstances

You were born in Country A and are a citizen of Country A.

You entered Australia on a temporary visa several years ago. This visa allowed you to reside in Australia for two years.

You subsequently extended this visa for several years further.

Your child is studying in Australia.

You are not permitted to work in Australia while on your temporary visa.

Your spouse resides in Country A and provides financial support while you are in Australia.

You purchased a property in Australia.

You and your child moved into the dwelling.

The dwelling has been your main residence since you purchased the property and has not been used to produce income.

You sold the property while you were residing in Australia.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1997 section 118-110

Income Tax Assessment Act 1997 section 768-915

Income Tax Assessment Act 1997 section 995-1