Private ruling: CGT - ownership interest in a leased property
Date of advice: 21 June 2016
Published: August 2016
Ruling period: Year ending 30 June 2016 | Year ending 30 June 2017
Date scheme commenced: 1 July 2015

Ruling: Q1: Are you considered to have an ownership interest in a property which is subject to a lease for the purposes of section 118-130 of the Income Tax Assessment Act 1997 ? | A1: Yes.

Relevant facts and circumstances: You are negotiating with Entity X for a lease of an apartment in a retirement village. You have paid a deposit on the lease and are about to execute a Deed of Agreement for Lease, including a Deed of Lease. You expect to occupy the property as your main residence during the 2016-17 financial year.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 118-115 | Income Tax Assessment Act 1997 Section 118-130

Reasons for decision: Summary: Section 118-130 of the Income Tax Assessment Act 1997 (ITAA 1997) states you have an ownership interest in a dwelling if: • for a dwelling that is not a flat or home unit - you have a legal or equitable interest in the land on which it is erected, or a licence or right to occupy it; or • for a flat or home unit - you have • a legal or equitable interest in a stratum unit in it, or • a licence or right to occupy it, or • a share in a company that owns a legal or equitable interest in the land on which the flat or home unit is erected and gives you a right to occupy it. A dwelling is defined in section 118-115 of the ITAA 1997 as including a unit of accommodation that: • is a building or is contained in a building, and • consists wholly or mainly of residential accommodation. You are entering into an agreement to lease the property in a retirement village. The property is considered to be a dwelling. The lease is a licence or right to occupy the property. As such, you are considered to have an ownership interest in property for the purposes of section 118-30 of the ITAA 1997.