Private ruling: Main residence
Date of advice: 23 August 2018
Published: October 2018
Ruling period: Period ending 31 March 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Can the property be treated as your main residence at any time during the period 1 April 2014 to 31 March 2019? | A1: No

Relevant facts and circumstances: You and your spouse are citizens of xxxx You and your spouse live and work in xxxx. You and your spouse have a main residence in xxxx. You and your spouse are not residents of Australia for taxation purposes. You and your spouse’s last visit to Australia was in xxxx for two weeks. You and your spouse purchased a property in xxxx with settlement in xxxx. Your building inspector found the dwelling to be unfit for occupancy. You and your spouse engaged a builder to demolish the existing dwelling and to build new home on the land. It took over two years to finalise the building contract but the plan did not meet Rescode, therefore had to be redesigned. You and your spouse engaged a new builder and it took a further two years for the redesign, planning and building of house. The house was completed on xxxx and the occupancy certificate was issued in xxxx. The home is still waiting on blinds, curtains, appliances, furniture, security system, fencing and landscaping. The home is currently vacant. Your employer will only allow you to take three months leave from your job in xxxx from xxxx. You intend to live in your property in Australia for the three months you are on leave from your job in xxxx. You will be on a visitor’s Visa during the three month period from xxxx. You intend on retiring from your job in xxxx in xxxx and you intend on living in your property in Australia permanently. Your spouse will continue to live in your home in xxxx for as long as they are employed in their job in xxxx. You will return to your home in xxxx for short visits. You and your spouse do not own any other residential properties in Australia. Your spouse intends on visiting Australia for one month every year due to their work commitments in xxxx. You applied for permanent residency xxxx, your application is still pending. Your spouse has not applied for permanent residency visa due to their employment. You and your spouse have one child who has lived in Australia since xxxx and is a permanent resident of Australia. You intend to sell the property in xxxx. Relevant legal provisions Income Tax Assessment Act 1997 sub-division 118-B Income Tax Assessment Act 1997 Section 118-110 Income Tax Assessment Act 1997 section 118-150 Income Tax Assessment Act 1997 section 118-185


Reasons for decision: Summary: While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision. Section 118-110 of the Income Tax Assessment Act 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. The guide to Capital gains Tax sets out the factors that are taken into consideration when determining if a dwelling is a taxpayer’s main residence. Whether a dwelling is a taxpayer’s sole or principal residence is an issue which depends on the facts in each case. Some factors may include, but are not limited to: ● the length of time the taxpayer has lived in the dwelling ● the place of residence of the taxpayer’s family ● whether the taxpayer has moved his or her personal belongings into the dwelling ● the address to which the taxpayer has his or her mail delivered ● the taxpayers address on the Electoral Roll ● the connection of services such as telephone, gas and electricity ● the taxpayer’s intention in occupying the dwelling A mere intention to occupy a dwelling as your main residence without actually doing so is not sufficient to get the exemption. If you own more than one dwelling during a particular period, only one of them can be your main residence at any one time except in limited circumstances when moving from one main residence to another (section 118-140 of the ITAA 1997). If you build a dwelling on a block of land you may be able to apply the main residence exemption if certain conditions are met as outlined in S118-150 of the ITAA 1997. One condition is that the dwelling becomes your main residence as soon as practicable after the work is finished; and it continues to be your main residence for at least three months. Also there is generally a four year time limit that applies. In your case the property was not your main residence as, you are a non-resident of Australia. Your intention is to visit Australia on short term visitor’s Visa from xxxx and you will return to your home, spouse and job in xxxx. You have not been in Australia since xxxx when you visited for two weeks. Your movements in and out of Australia are consistent with a non-resident. You intend to stay in the dwelling during your visit, but you won’t live or reside there. There is a significant delay from when you acquired your ownership interest in the property, to when you intend to move into the dwelling and the circumstances surrounding the delays are not unforeseen. The choice to stay in xxxx until your employer in xxxx allows you to have three months leave from your employment would not be considered unforeseen circumstances nor would your planned retirement in xxxx. That is it is not considered that you moved into the house as soon as practicable after the work was completed. You normally live and work in xxxx. You have a main residence in xxxx. Accordingly you cannot treat the property as your main residence under section 118-110 of the ITAA 1997 for the period from April 2014 to 31 March 2019. As you are still living and working in xxx until xxxx, the property cannot be regarded as your main residence any time before this. No exemption or partial exemption applies for this period under sub division 118-B. Further information You asked for the private ruling to apply from xxxx income year to the year when you intend to sell property in xxxx. The Commissioner does not rule for indefinite or extended periods as there may be changes to the facts of the arrangement or the law in question. Also, a public ruling may issue which affects the private ruling. Therefore, we will only rule for the period 1 July 2018 to 31 March 2019.