Private ruling: Main residence exemption
Date of advice: 29 August 2017
Published: December 2017
Ruling period: Year ending 30 June 20EE
Date scheme commenced: 1 July 20DD

Ruling: Q1: Can you make an absence choice, and treat the dwelling located at the address supplied as your main residence for the entire ownership period? | A1: No

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You immigrated to Australia some decades ago and lived and worked in Australia in many roles until 19AA. In 19AA, you returned overseas and worked in senior management roles until retiring. You then commenced a consultancy business based outside Australia. You married your spouse in 19BB (spouse). You and your spouse have a child. In 20CC you and your spouse purchased a dwelling in Australia. You occupied the dwelling immediately following settlement and stayed there for a period of around four weeks before returning overseas. Throughout 20CC to 20DD, you and your spouse made a number of short visits to Australia. The short visits in which you and your spouse occupied the dwelling are attributable to visa restrictions which restrict the duration that your spouse can remain in Australia. Your spouse is a not a resident of Australia. During 20CC to 20DD, you were engaged in business dealings in Australia. No rental income has been derived from your dwelling. You and your spouse have personal possessions contained within your dwelling. You garaged a motor vehicle you purchased in 20CC at your dwelling. When in Australia, you and your spouse visit family members, socialise, engage in recreational activities. You hold casual membership at sporting facilities. When not in Australia, you and your spouse reside in a leased property. You have sold your dwelling, and you and your spouse purchased a smaller property as part of your retirement planning.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-110 | Income Tax Assessment Act 1997 section 118-145

Reasons for decision: Summary: You have not established the dwelling as your main residence, or the main residence of your spouse. Therefore, you cannot make an absence choice election and treat the dwelling as your main residence during periods when you and your spouse did not reside in the dwelling. | Detailed Reasoning - CGT main residence exemption rules: You can disregard a capital gain that arises from disposing of your main residence if: ● the dwelling was your home for the whole of your ownership period ● the dwelling was not used to produce assessable income, and ● any land on which the dwelling is situated is not more than two hectares. Some relevant factors in determining whether you have established a dwelling as your main residence may include, but are not limited to: ● the length of time you have lived in the dwelling ● the place of residence of your family ● whether you have moved your personal belongings into the dwelling ● the address to which you have your mail delivered ● your address on the Electoral Roll ● the connection of services such as telephone, gas and electricity, and ● your intention in occupying the dwelling. | Detailed Reasoning - Continuing main residence status during absence: Generally, a dwelling is no longer your main residence once you stop living in it. However, in some cases you can choose to continue to treat a dwelling as your main residence for CGT purposes even though you no longer live in it. This is known as an absence choice. | Detailed Reasoning - Application to your circumstances: In your case, you did not establish the dwelling as your main residence. You have not lived in Australia since 19AA, and you are not a resident of Australia for tax purposes. You have at all times since 19AA maintained a main residence outside Australia. Your time spent in Australia during your ownership period was very limited, and it is considered that you did not abandon your common law principal place of residence which is outside of Australia. You have maintained a leased premises in a foreign country in which you and your spouse reside and you base a consultancy business from the foreign country because of the connections you have in that country. You visits to Australia have been periodic, but short term. Your spouse is restricted in the duration in which they can stay in Australia, and visited Australia on a temporary visa. Your spouse has never been an Australian resident. As you did not establish the dwelling as your main residence, or as the main residence of your spouse, you are unable to apply the absence choice during periods in which you were absent from the dwelling, and you are not entitled to a main residence exemption.