Private ruling: CGT - main residence exemption - foreign dwelling
Date of advice: 4 May 2022
Published: July 2022
Ruling period: Income year ending 30 June 20XX.
Date scheme commenced: 1 July 20XX.

Ruling: Q1: Are you entitled to the capital gains tax main residence exemption so that the capital gain made on the sale of the Foreign Dwelling can be disregarded? | A1: Yes. In accordance with the principles contained in Taxation Determination TD 95/7, a taxpayer can, in relation to an overseas dwelling that has ceased to be their main residence before becoming a resident of Australia, make a choice to treat the dwelling as having continued to be their main residence in their absence, subject some other requirements being satisfied under section 118-145 of the Income Tax Assessment Act 1997 (ITAA 1997). Based on the facts provided, you are entitled to make a choice under section 118-145 of the ITAA 1997 to treat your ownership interest in Foreign Dwelling as continuing to be your main residence from when it was first available for rent until its disposal, and you can claim a full capital gains tax main residence exemption on your ownership interest in the Foreign Dwelling. Further information on the choice that can be made under section 118-145 of the ITAA 1997 can be viewed on our web site ato.gov.au by searching for Quick Code (QC) 66030.

Relevant facts and circumstances: You purchased a property (the Foreign Dwelling) located in a foreign country (Country A) after 20 September 1985 that you and your family moved into when it was purchased and lived in for several years. Your spouse did not own any property in Country A. You and your family decided to move to Australia. You moved out of the Foreign Dwelling and rented it out. You and your family lived in rented accommodation in Country A for several months before you moved permanently to Australia, becoming a resident of Australia for taxation purposes. The Foreign Dwelling was leased for several periods, totalling less than six years, having been put on the market for sale several years before the end of the last lease. After the last lease had ended, your parent stayed in the Foreign Dwelling to assist with the sale of the property, with a contract of sale being entered into several months after the lease had ended. Neither you nor your spouse own any property in Australia and have been staying in rental accommodation since your arrival in Australia. You are planning to purchase your first property in Australia.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 102-20 | Income Tax Assessment Act 1997 Section 104-10 | Income Tax Assessment Act 1997 Section 118-145 | Income Tax Assessment Act 1997 Subsection 118-145(2)