Private ruling: Capital gains tax - disposal of main residence and foreign resident capital gains
Date of advice: 9 August 2018
Published: October 2018
Ruling period: Year ended 30 June 2018 | Year ending 30 June 2019
Date scheme commenced: 1 July 2017

Ruling: Q1: Will the capital gain or loss on the sale of your property be disregarded? | A1: Yes | Q2: Is the settlement of the property subject to foreign resident capital gains withholding? | A2: No | Q3: Is there a minimum number of days in the financial year ended 30 June 20XX that you are required to remain in Australia to not be subject to foreign resident capital gains withholding upon the settlement of your main residence? | A3: No | Q4: Is there a date in the financial year ended 30 June 20XX before which you are unable to leave Australia to take up overseas employment, and therefore ceasing to be an Australian resident for tax purposes, that would trigger capital gains tax or foreign resident capital gains withholding upon the sale and settlement of your main residence? | A4: No A capital gain or capital loss an individual makes from a Capital Gains Tax (CGT) event that happened to a dwelling is disregarded if the dwelling was the individual’s main residence throughout the period it was owned. Also, from 1 July 2017 purchasers of certain Australian assets are obliged to withhold 12.5 per cent (or an amount varied to a lesser percentage) of the purchase price of an asset on settlement where they have purchased the property from a foreign resident, and to remit this amount to the Commissioner. However, Australian resident vendors can apply to the Commissioner for a clearance certificate indicating that the withholding is not required. In your case, the property was your main residence for the entire ownership period, and you have obtained a foreign resident capital gains withholding clearance certificate which covers the period of the sale contract. Therefore, you are able to claim the CGT main residence exemption, and the settlement of your main residence is not subject to Foreign resident capital gains withholding.

Relevant facts and circumstances: After a period of time you and your spouse spent living and working overseas, you both returned to Australia in 20XX and have lived and worked in Australia since that date. As such you and your spouse have been a resident of Australia for tax purposes since late in 20XX. You and your spouse purchased an Australian property late in 20XX which was your main residence for the entire period you have owned the property. You sold the property in early 20XX (the sale contract date), and settlement is scheduled later that year. You and your spouse did not have another main residence throughout the entire period of ownership. You have received a foreign resident capital gains withholding clearance certificate that covers the sale contract date. You intend on travelling overseas with your family for some short trips in late 2018. You are also considering relocating overseas for employment reasons following the settlement of your main residence.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 118-110 | Subdivision 14-D of Schedule 1 to the Taxation Administration Act 1953