Taxation Ruling
IT 2022
Income tax : section 26AAA(5)(c) sale of family residence within 12 months of purchase as a result of a change in the place of business or employment of either the husband or the wife
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FOI status:
May be releasedFOI number: I 1102823FACTS
As a result of a transfer in a husband's place of employment to an overseas locality the family residence, jointly owned by the husband and wife, was sold within 12 months of the date of its purchase. The question has been raised whether section 26AAA(5)(c) excludes from the assessable income the total profit on the sale of the residence or only the husband's share of the profit.
2. Section 26AAA(5)(c) is open to two constructions. On the one hand it could be said that the sub-section requires that only the husband's share of profit be excluded from assessable income. On the other hand, the sub-section can be read to mean that where a taxpayer sells property which he or she either owns or has an interest in, the property constitutes his or her sole or principal residence and the sale is brought about as a result of a change of place of employment or place of business of the taxpayer, then the total profit on the sale of the property is excluded from assessable income.
3. In circumstances such as this where two or more constructions of a statutory provision are open it is permissible to have regard to the intentions of the Parliament in enacting the provision. In introducing section 26AAA into the Income Tax Assessment Act the then Treasurer said in his Second Reading Speech that "an exemption from the operation of section 26AAA is proposed to meet the case where a person finds it necessary to quickly sell a home because of a change of place of business or employment". Much the same sentiments are expressed in the Explanatory Memorandum to the Second Reading Speech. It would seem, therefore, that it was the intention of the Parliament to exclude from assessable income the profit arising from the sale of a home in the stipulated circumstances. In the result the second interpretation of the sub-section is to be preferred.
RULING
4. In practical terms this will mean that, where a property is jointly owned by a husband and wife and the property is sold within 12 months of purchase as a result of a change in place of business or employment of either the husband or the wife, section 26AAA(5)(c) will operate to exclude the profit from the assessable income of both the husband and wife.
COMMISSIONER OF TAXATION
25 February 1983