Private ruling: CGT main residence exemption
Published: December 2013
Ruling period: Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016
Date scheme commenced: 1 July 2013

Ruling: Q1: Can you calculate your partial main residence exemption using a different formula to that provided in subsection 118-185(2) of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You acquired a property for investment purposes. Your current tenant's lease is due to expire. You intend to move into the property and treat it as your main residence. You have never lived in the property prior to this. You will dispose of your property in the future and have enquired about how to determine the assessable capital gain or loss.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 118-185

Reasons for decision: Summary: Subsection 118-185(1) of the ITAA 1997 provides that you are only entitled to a partial main residence exemption in relation to a CGT event that happens to a dwelling where the following applies: · you are an individual · the dwelling was your main residence for only part of your ownership period; and · the interest did not pass to you as a beneficiary in, and you did not acquire it as a trustee of, the estate of a deceased person. Subsection 118-185(2) of the ITAA 1997 provides the calculation to be used in determining your assessable capital gain or loss in the above circumstances: Capital gain or loss (capital proceeds - cost base) × Non-main residence days Total days in your ownership period In your case, you did not acquire the property as a beneficiary or trustee of a deceased estate and when you dispose the property, it will have only been your main residence for part of your ownership period. Accordingly, you will use the formula provided in subsection 118-185(2) of the ITAA 1997 to determine your capital gain or loss from the disposal. There is no provision in the legislation that provides the Commissioner the discretion to allow you to determine your partial exemption in any other manner.