Private ruling: Main residence - Foreign resident at the time of CGT event
Date of advice: 18 August 2025
Published: 20 October 2025
Ruling period: Year ended 30 June 20XX
Date scheme commenced: XX XXXX 20XX

Ruling: Q1: Are you entitled to the main residence exemption for the sale of the Property for the period that you lived in the Property? | A1: No. | Q2: Are you entitled to make an absence choice under section 118-145 of the Income Tax Assessment Act 1997 (ITAA 1997) in relation to the sale of the Property? | A2: No. | Q3: Are you entitled to a relationship breakdown rollover on the sale of the Property? | A3: No.

Relevant facts and circumstances: You were born in Australia. After 20 September 1985, you solely purchased the dwelling located at the Property. The Property is less than 2 hectares in size. For a period, you solely used the Property to produce income as a rental. Subsequently, you moved into the Property as your main residence but had to share the property with a couple tenants until they moved out. For a period, the entire Property was used as your main residence. After XX XXXX 20XX, the Property was used to as a rental again and you continued to treat it as your main residence under the 6-year absence choice. On XX XXXX 20XX, you moved to Country A and became a foreign resident. Since XX XXXX 20XX, you have not had a spouse or dependants. While a foreign resident of Australia you purchased a property in Country A. On XX XXXX 20XX, you entered a contract to sell the Property. On XX XXXX 20XX, the Property settled. At the time of selling the Property, you did not have a terminal medical condition.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 section 115-1 | Income Tax Assessment Act 1997 section 115-105 | Income Tax Assessment Act 1997 section 118-110 | Income Tax Assessment Act 1997 subsection 118-110(3) | Income Tax Assessment Act 1997 section 115-115 | Income Tax Assessment Act 1997 section 115-115 | Income Tax Assessment Act 1997 section 118-145 | Income Tax Assessment Act 1997 subdivision 126-A | Income Tax Assessment Act 1997 section 126-5 | Income Tax Assessment Act 1997 section 126-25

Reasons for decision: Detailed Reasoning - Question 1: You have not provided supporting information that you meet any of the subparagraphs covered in subsection 118-110(5)(b) of the ITAA 1997 and therefore you do not satisfy the 'life events' test. You are not eligible for a full main residence exemption on the disposal of the Property. You have not been a foreign resident for the entire holding period of the asset, and therefore there you would be entitled to apply a partial CGT discount. You are entitled to apply the CGT discount for the period you owned the property as an Australian resident. Subsection 115-115(2) of the ITAA 1997 provides the formula to calculate your discount percentage. | Detailed Reasoning - Question 2: Because the 6-year absence choice is an extension of the main residence exemption, it is inaccessible to foreign residents who are not eligible for the exemption at the time of the CGT event. As stated previously, you have not met the life events test and are therefore not eligible for the main residence exemption. You are also not eligible for the 50% discount because you were a foreign resident at the time of the disposal. However, 115-115 allows a reduced CGT discount reflecting the proportion of time you were a resident. | Detailed Reasoning - Question 3: Subdivision 126-A of the ITAA 1997 provides that where an asset is transferred from you to your spouse/ex-spouse as a result of a relationship breakdown, a rollover of the CGT may be available where the transfer of the asset is due to a court order or other legal instrument listed in section 126-5 of the ITAA 1997. The roll-over allows the spouse doing the transferring, being the transferor, to disregard a capital gain or capital loss that would otherwise arise as a result of the transfer of their CGT asset to their spouse/ex-spouse, being the transferee. The CGT which normally applies when ownership of an asset changes is deferred. Since becoming a foreign resident, you have not had a spouse or a relationship breakdown under subdivision 126-A of the ITAA 1997. | Detailed Reasoning - Detailed reasoning: Section 102-20 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that a capital gain or capital loss results from a capital gains tax (CGT) event occurring. CGT event A1 arises when you dispose of a CGT asset (section 104-10 of the ITAA 1997). You dispose of a CGT asset when a change of ownership occurs from you to another entity, whether because of some act or event, or by operation of law (subsection 104-10(2) of the ITAA 1997). | Detailed Reasoning - Marriage breakdown: As stated previously, a CGT event will happen when there is a change of ownership of an asset acquired on or after 20 September 1985. However, marriage or relationship breakdown rollover relief under subdivision 126-A of the ITAA 1997 is potentially available when CGT event A1 happens involving asset transfers between former spouses under a court order or other legal instrument detailed in subsection 126-5(1) of the ITAA 1997. Under subdivision 126-A of the ITAA 1997 the rollover applies if your marriage or relationship ended on or after 20 September 1985, and: • you transfer an asset or a share of an asset to your spouse • you receive an asset or a share of an asset from your spouse, or • a company or trustee of a trust transfers an asset to you or your spouse. Under subsection 126-5(3A) of the ITAA 1997, there is no roll-over because of a financial binding agreement made under the Family Law Act 1975 , unless the following conditions set out in section 126-25 are met: • the spouses are separated, and • there is no reasonable likelihood of cohabitation resuming, and • the transfer is for reasons directly connected with the breakdown of the marriage or relationship Under subsection 118-130(1) of the ITAA 1997 the definition of ownership interest in a dwelling includes having a legal or equitable interest in it. Subsection 118-130(2) and 118-130(3) combined provides you have an ownership in a dwelling that you acquired under a contract from when you obtain legal ownership of it (purchase settlement) until your legal ownership ends (sale settlement). 'Ownership period' is defined in section 118-125 of the ITAA 1997 as the period on or after 20 September 1985 when you had an ownership interest in the dwelling. Section 118-178 of the ITAA 1997 has the effect that where an ownership interest in a dwelling is acquired from a spouse that attracts the marriage or relationship roll-over, you are taken to have acquired that interest when your spouse acquired it. You are subject to capital gains tax on that interest until the time of transfer unless your spouse was eligible for the main residence exemption during that period. | Detailed Reasoning - Main Residence: Section 118-110 of the ITAA 1997 provides that you can disregard a capital gain or capital loss made from a CGT event that happens to a dwelling that is your main residence. To qualify for full exemption, the dwelling must have been your main residence for the whole period you owned it, the ownership period, and must not have been used to produce assessable income. Under subsection 118-110(3), if you are a foreign resident at the time the CGT event occurs, you are not entitled to the main residence exemption from CGT for property sold after 30 June 2020, unless you satisfy the requirements of the life events test. When you dispose of your residential property, you satisfy the requirements of the life events test if both of the following are true: • you were a foreign resident for tax purposes for a continuous period of 6 years or less • during that period, one of the following occurred - your spouse or your child under 18 had a terminal medical condition - spouse or your child under 18 died - CGT event happened because of a formal agreement following the breakdown of your marriage or relationship. | Detailed Reasoning - Absence choice: Section 118-145 of the ITAA 1997 provides the absences rule that if a dwelling that was your main residence ceases to be your main residence, you may choose to continue to treat it as your main residence (absence choice). 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. | Detailed Reasoning - CGT discount: Section 115-100 of the ITAA 1997 also allows for a reduction in a capital gain by 50% where you purchased the dwelling after 21 September 1999, and you have owned it for at least 12 months. However, subsection 115-105(2) states that this discount is not available where, you disposed of the CGT asset after 8 May 2012, and you were a foreign resident at the time of the disposal. Section 115-25 of the ITAA 1997 provides that the partial discount may apply if you held a CGT asset for more than 12 months. However, sections 115-100, 115-110, and 115-115 work to deny you a discount to the extent that you accrued a capital gain while a foreign resident. | Detailed Reasoning - Question 1: Although for periods prior to XX XXXX 20XX, you treated the Property as your main residence under section 118-110 of the ITAA 1997. At the date of sale of the Property, you were a foreign resident. Therefore, you will need to satisfy the two requirements set out by subsection 118-110(5) of the ITAA 1997 to qualify for the main residence exemption. The first requirement is that you have been a foreign resident for a period less than 6 year which based on the circumstances advised in this ruling you have met. You have not provided supporting information that you meet any of the subparagraphs covered in subsection 118-110(5)(b) of the ITAA 1997 and therefore you do not satisfy the 'life events' test. You are not eligible for a full main residence exemption on the disposal of the Property. You have not been a foreign resident for the entire holding period of the asset, and therefore there you would be entitled to apply a partial CGT discount. You are entitled to a apply the CGT discount for the period you owned the property as an Australian resident. Subsection 115-115(2) of the ITAA 1997 provides the formula to calculate your discount percentage. | Detailed Reasoning - Question 2: Because the 6-year absence choice is an extension of the main residence exemption, it is inaccessible to foreign residents who are not eligible for the exemption at the time of the CGT event. As stated previously, you have not met the life events test and are therefore not eligible for the main residence exemption. You are also not eligible for the 50% discount because you were a foreign resident at the time of the disposal. However, 115-115 allows a reduced CGT discount reflecting the proportion of time she was a resident. | Detailed Reasoning - Question 3: Subdivision 126-A of the ITAA 1997 provides that where an asset is transferred from you to your spouse/ex-spouse as a result of a relationship breakdown, there is automatic roll-over in certain cases when the necessary conditions have been met. The roll-over allows the spouse doing the transferring, being the transferor, to disregard a capital gain or capital loss that would otherwise arise as a result of the transfer of their CGT asset to their spouse/ex-spouse, being the transferee. The CGT which normally applies when ownership of an asset changes is deferred. Since becoming a foreign resident, you have not had a spouse or a relationship breakdown under subdivision 126-A of the ITAA 1997.