Private ruling: Residency and capital gains tax
Date of advice: 5 July 2019
Published: October 2019
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you an Australian resident for taxation purposes? | A1: Yes. Given regard to your circumstances as a whole and consideration of the relevant residency tests, the Commissioner is satisfied you are a resident of Australia for income tax purposes and your domicile is Australia. | Q2: Can you apply a partial main residence exemption to the portion of the dwelling during the period that was not being used to produce income upon disposal? | A2: Yes. In most cases the proportion of the floor area of the home that is set aside to produce income is assessable. In your case for a period of time the ground floor was made available for rent and the upper level was your primary main residence during your ownership period. You qualify for the 50% general discount capital gain as you owned the asset for more than twelve months.

Relevant facts and circumstances: You commenced volunteering overseas in 20XX and continue to do so. During 20XX to early 20XX you lived with your spouse in your family home (property A). On each return to Australia during your breaks from volunteering you returned to property A. You continued to maintain your lifestyle, family ties, social and living arrangements and considered Australia as your domicile and permanent place of abode. In early 20XX you vacated property A and moved into property B. Your spouse originally purchased property B in 20XX as the sole owner. Through a divorce settlement in 20XX you acquired property B at 100% ownership interest. You made this your principal main residence. Property B consisted of two levels - ground and upper - the lower level was made available for rent and produced income from 20XX until property was disposed of. You lived in the upper level of this property as your main residence. While still volunteering, you continued to return to Australia namely property B during your breaks and your lifestyle and connections remained the same. In 20XX a contract of sale was executed and property B was sold.

Relevant legislative provisions: Income Tax Assessment Act 1936 section 6(1)(a) | Income Tax Assessment Act 1936 section 104-10 | Income Tax Assessment Act 1936 section 115-10 | Income Tax Assessment Act 1936 section 118-180 | Income Tax Assessment Act 1936 section 118-190 | Income Tax Assessment Act 1997 section 995-1