Private ruling: Capital gains tax main residence exemption and absence rule
Date of advice: 6 April 2018
Published: June 2018
Ruling period: Financial year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you able to apply the main residence exemption to Unit 2/property 1 for the period 24 February 20XX to 27 February 20XX? | A1: Yes Having considered your circumstances and evidence available at the time of application, the Commissioner has determined that the full main residence exemption would apply to Unit 2/property 1 for your ownership period of February 20XX to February 20XX under section 118-110 of the Income Tax Assessment Act 1997 (ITAA 1997). | Q2: Are you able to apply the absence rule to the property and adjacent land at property 1, later known as Unit 1/property 1, for the purpose of the main residence exemption for the period August 19XX to February 20XX? | A2: Yes Having considered your circumstances and evidence available at the time of application, the Commissioner has determined that the absence rule under section 118-145(2) of the ITAA 1997 would apply to the property and adjacent land known as Unit 1/property 1, as you were not absent from the main residence for more than six years during your ownership period of August 19XX to February 20XX?.

Relevant facts and circumstances: You were an Australian resident for taxation purposes. You passed away intestate on 30 January 20XX and your estate is being administered by a trustee. In an attempt to reconstruct your records and establish your main residence the trustee has sought documents and information from a range of organisations and family members. Prior to the purchase of any properties in your name you resided at your brother’s property. You returned to this property to undertake maintenance and upkeep work for your brother over the years, at times staying there for short periods of time. You purchased property 1 in 19XX which consisted of one dwelling and was less than 2 hectares. This became your main residence and you returned to it regularly when not maintaining your brother’s property. You purchased property 2 some time later. You moved into this property to undertake renovations and repairs for short periods of time. You derived and reported rental income from this property during the times you were not there undertaking improvements. In 20XX, your City Council granted you a planning permit in relation to property 1 and soon after you obtained an owner-builder permit. You commenced building on the property and constructed a new single level unit at the rear of the property. The property then became known as Unit 1 & 2 of property 1 and was treated as two separate assets. The occupancy permit for unit 2 was issued to you some time later. You moved into unit 2 and chose to make this dwelling your new main residence. Unit 1 was then used for the purpose of producing assessable income until you passed away. You have derived and reported income attributable to both of your properties. Property 1 was available for full time rent for one year however was more often only available for periodic rental as you returned to it regularly. Property 2 was available for rent on a full time basis for considerable periods of time. Whist undertaking maintenance, renovations and repairs to other properties, you were not absent from your main residence at property 1 for more than six years. All properties were sold in the 20XX-XX and 20XX-XX financial years.

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