Private ruling: Capital gains tax - main residence exemption - absence choice
Date of advice: 4 February 2016
Published: May 2016
Ruling period: Year ending 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Is the capital gain or capital loss made on the disposal of your dwelling disregarded? | A1: Yes


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 104-10 | Income Tax Assessment Act 1997 Section 118-110 | Income Tax Assessment Act 1997 Section 118-145

Reasons for decision: Detailed Reasoning - Capital gains tax: Capital gains tax (CGT) is the tax you pay on any capital gain you make and include on your annual tax return. There is no separate tax on capital gains; it is merely a component of your income tax. You are taxed on your net capital gain at your marginal tax rate. You make a capital gain or capital loss if a CGT event happens. The most common CGT event happens when you dispose of an asset to someone else, for example, if you sell or give away an asset. A capital gain or capital loss will occur when a capital gains tax (CGT) event happens to a CGT asset. The most common CGT event is CGT event A1 which occurs when a CGT asset is disposed of. | Detailed Reasoning - Main residence exemption: Generally, you can fully disregard a capital gain or capital loss made on the sale of a dwelling that is your main residence if: ● the dwelling was your home for the whole period you owned it ● the dwelling was not used to produce assessable income, and ● any land on which the dwelling is situated is not more than 2 hectares. | Detailed Reasoning - Absence choice: In some cases, you can choose to treat a dwelling as your main residence even though you no longer live in it. The absence provision allows a dwelling that is your main residence to continue to be treated as your main residence during a period of absence from the dwelling.

Relevant facts: You acquired an interest in a dwelling in 2011 (the dwelling). | You moved into the dwelling as soon as practical after settlement and resided in the dwelling for a number of months. | You continued to treat the dwelling as your main residence during periods of absence. | You did not have another main residence during your ownership of the dwelling. | You sold the dwelling and settlement occurred in 2014.