Private ruling: Capital gains tax
Date of advice: 28 April 2020
Published: June 2020
Ruling period: Year ended 30 June 20 20
Date scheme commenced: 1 July 2018

Ruling: Q1: Are the house and granny flat to be treated as separate properties for the purposes of section 118-110 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No. | Q2: Are you able to disregard any CGT in relation to the properties as per section 118-145 of the ITAA 1997? | A2: Yes. The Commissioner considers that the property continued to be your main residence prior to its sale. The property was rented out for a period of time, this period of time was less than six years and the absence rule can apply. Accordingly, the property can be treated as your main residence for capital gains tax purposes for your entire period of ownership and you can disregard the gain made on its disposal. Further information about this discretion can be found by searching 'QC 52189' on ato.gov.au.

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 purchased, a property (the property) with your spouse as joint tenants. You both used the property as your main residence. Your spouse passed away. A granny flat was built at the rear of the property. The granny flat and the area used in conjunction with the granny flat represents approximately XX% of the total land area of the property. The granny flat was fenced off from the main house with its own side access gate. You arranged for the granny flat to have separate electricity and water bills You did not subdivide the land and continued to receive one bill of land rates. You moved into the granny flat and rented the main house under a lease. The lease provided the tenants exclusive access of the main house and a single car port. You continued the right to occupy the granny flat and use of an additional single car port. A new lease was entered with new tenants. The new tenant obtained the same access as the previous lease and you maintained your access to the granny flat. In XXXX, the tenants moved out of the main house. You moved out of the granny flat and back into the main house. The main house and the granny flat were both sold in one transaction on the XX XXXX 20XX. You lived in the main house until the property sold and settled. While you owned the property, you did not own any other properties.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-110 | Income Tax Assessment Act 1997 section 118-115 | Income Tax Assessment Act 1997 section 118-145