Private ruling: CGT Main Residence
Date of advice: 8 March 2018
Published: June 2018
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to a main residence exemption when you transfer the property to your family? | A1: No

Relevant facts and circumstances: You and your partner have been living and working in Country Y since the early 19XY’s. You and your partner purchased a property in Australia in 20XX for your children to live in. Your sons were XX and XX years of age when they moved into the property in 20XX straight after settlement. You and your partner have stayed at the Australian property when you visited your children. You first stayed in the Australian property in 20XX when you returned to Australia for a visit. You do not own any other properties in Australia. You and your partner intend on transferring the property to your family in the 20XX income year.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-110.

Reasons for decision: Summary: Section 118-110 of the ITAA 1997 provides that you can disregard a capital gain or capital loss made from a CGT event that happens to a dwelling that is your main residence. To qualify for full exemption, the dwelling must have been your main residence for the whole period you owned it, the ownership period, and must not have been used to produce assessable income. The guide to Capital gains Tax sets out the factors that are taken into consideration when determining if a dwelling is a taxpayer’s main residence. Whether a dwelling is a taxpayer’s sole or principal residence is an issue which depends on the facts in each case. Some factors may include, but are not limited to: ● the length of time the taxpayer has lived in the dwelling ● the place of residence of the taxpayers family ● whether the taxpayer has moved his or her personal belongings into the dwelling ● the address to which the taxpayer has his or her mail delivered ● the taxpayers address on the Electoral Roll ● the connection of services such as telephone, gas and electricity ● the taxpayers intention in occupying the dwelling A mere intention to occupy a dwelling as your main residence without actually doing so is not sufficient to get the exemption. In your case the Commissioner is not satisfied that the property is your main residence as you did not reside in the property you have only stayed there on occasions. You and your partner first stayed in the Australian property in 20XX when you came to Australia to visit your children and you had purchased the property in 20XX. You and your partner were living and working in Country Y and have done so since the early 19XY’s. Accordingly you cannot treat the property as your main residence under section 118-110 of the ITAA 1997. A main residence exemption is not available to you when you transfer the property to your family.

ATO view documents: Guide to capital gains tax 2017.