Private ruling: Capital gains tax
Date of advice: 1 August 2018
Published: September 2018
Ruling period: Year ending 30 June XXXX
Date scheme commenced: 1 July XXXX

Ruling: Q1: Will the main residence exemption be available from XXXX to XXXX? | A1: Yes | Q2: Will the full main residence exemption be available from XXXX to XXXX? | A2: No | Q3: Will the property continue to be your main residence from XXXX to XXXX? | A3: Yes | Q4: Are you taken to have acquired the dwelling for its market value at XXXX under the special rule in section 118-192 of ITAA 97? | A4: Yes

Relevant facts and circumstances: The property is situated. The land was less than two hectares. The property was originally purchased by a sole proprietor pre Capital Gains Tax (CGT). This was their main residence. Date of death was XXXX. Under the terms of the Will, the spouse had the use and occupation of the dwelling for their lifetime. (Will supplied). Market value at date of death was $XXXX. The property was the main residence of spouse and their offspring/beneficiary. Administrators were appointed for the beneficiary. Due to beneficiary’s condition of intellectual impairment, there was a forced move into a residential support services from XXXX. Spouse resided in this property as the main residence up to their death. The property passed onto beneficiary as per Will. The beneficiary always had the intention to return to the family home, however was unable to do so due to significant health issues. The beneficiary currently resides at the supported residential accommodation. The property was made available to rent and became income producing from XXXX. The title of the property was transferred to beneficiary on XXXX. The property sold. The property settled. Assumption(s)

Relevant legislative provisions: Income Tax Assessment Act 1997 (ITAA 97) section 118-192 of ITAA 97 | section 118-190 (1) of ITAA 97 | section 118-145(2) of ITAA 97

Reasons for decision: Summary: Will the main residence exemption be available from XXXX to XXXX? Yes Subdivision 118-B of the ITAA provides a CGT exemption for your main residence where the relevant requirements are met. Under subsection 128-15 (2) of the ITAA 1997 you are taken to have acquired the property on the day your parent died. The spouse had a right to occupy the residence under the Will of the deceased and resided in this property as their main residence up to their death. Although you moved out of the property in XXXX, you chose to continue to treat it as your main residence under section 118-145 of the ITAA 1997. Hence there is a main residence exemption for this property from XXXX to XXXX. Will the full main residence exemption be available from XXXX to XXXX? No Under Subsection 118-190 (1) of the ITAA of 1997, you get only a partial exemption for a CGT event that happens in relation to a dwelling or your ownership interest in it if (b)the dwelling was used for the purpose of producing assessable income during all or a part of that period As the property was rented out from XXXX until XXXX, the full main residence exemption will not apply. Will the property continue to be your main residence from XXXX to XXXX? Yes Section 118-145(2) of ITAA 1997 states that if you use the part of the dwelling that was your main residence for the purpose of producing assessable income, the maximum period that you can treat it as your main residence under this section while you use it for that purpose is 6 years. Therefore you are able to treat the property as your main residence the XXXX to XXXX. Are you taken to have acquired the dwelling for its market value at XXXX under the special rule in section 118-192 of ITAA 97? Yes Under section 118-192 of ITAA 1997, you are taken to have acquired the entire property for its market value as at the date the property was first used to produce income, therefore you are eligible for the special rule under this provision. When calculating your capital gain the total days of ownership are from XXXX to XXXX. Your non main residence days are from XXXX to XXXX.