Private ruling: Capital gains tax
Published: April 2013
Ruling period: Year ending 30 June 2013 | Year ending 30 June 2014
Date scheme commenced: 1 July 2012

Ruling: Question and answer | Are you entitled to a full exemption from CGT upon the sale of the dwelling? | Yes.

Relevant facts and circumstances: Your parent purchased the dwelling prior to 20 September 1985. The dwelling was your parent's main residence. Your parent died in the relevant year. You and your sibling are the beneficiaries of your parent's estate. Your sibling was permitted to continue to occupy the dwelling under the terms of your parent's will for the expiration of a specific number of years from the date of their death. Your sibling is currently living in the dwelling and will continue to do so until its disposal. You and your sibling intend to dispose of the dwelling within a specific number of years of the date of your parent's death.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 128-15. | Income Tax Assessment Act 1997 Section 118-195. | Income Tax Assessment Act 1997 Section 118-200. | Income Tax Assessment Act 1997 Section 118-210.

Reasons for decision: Summary: Under section 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997). Where the deceased acquired the ownership interest before 20 September 1985, there is a full CGT exemption for the beneficiaries to whom such a dwelling passes for any capital gain that is made from a relevant CGT event happening if: (1) the beneficiaries' ownership interest ends within two years of the deceased's death, or (2) from the time of the deceased's death until the beneficiaries' ownership interest ends, the dwelling was the main residence of one or more of the following: · the spouse of the deceased immediately before death (except a spouse living permanently and separately apart from the deceased) · an individual who had a right to occupy the dwelling under the deceased's will, or · if the CGT event was brought about by the individual to whom the ownership interest passed as a beneficiary - that individual. In your case, the deceased acquired the ownership interest in the dwelling before 20 September 1985, and your sibling has the right to occupy the dwelling under the deceased's will for a specific number of years. The dwelling will be disposed of prior to the expiry of the specific period. Your sibling will continue to live in the property until its disposal. Therefore, all conditions of section 118-195 of the ITAA 1997 have been met, and you entitled to a full exemption from CGT upon the sale of the dwelling.