Private ruling: CGT - exemption
Date of advice: 13 March 2024
Published: 22 April 2024
Ruling period: Year ending 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Are you able to use the main residence exemption to disregard any capital gain or loss you make on the sale of the Property? | A1: No.

Relevant facts and circumstances: You are the sole director of a company. The company was formed a number of decades ago. The reason for the creation of the company was so that you and some other people could purchase a house. The company purchased a property. Since the time the company was formed the other shareholders left the company, and the shares were all eventually passed to you. The company has never undertaken any business activities. The house has been your main residence since it was purchased. The house has never been used to produce assessable income. The property is less than 2 hectares in size. You are selling the property.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 102-20 | Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 section 118-110

Reasons for decision: Summary: Section 102-20 of the Income Tax Assessment Act 1997 (ITAA 1997) states that a capital gain or capital loss is made only if a capital gains tax (CGT) event happens to a CGT asset. The Property is a CGT asset. CGT event A1 happens under section 104-10 of the ITAA 1997 if a change in ownership of a CGT asset occurs. | Detailed Reasoning - Main residence: Under the main residence exemption a capital gain or capital loss made from the disposal of a dwelling is ignored under section 118-110 of the ITAA 1997 if: • you are an individual; • the dwelling was your main residence throughout your ownership period; • the property was not used to produce assessable income; and • any land on which the dwelling is situated is not more than two hectares. The main residence exemption is not available to a company. Therefore, you will not be eligible to apply this exemption to any capital gain you made on the disposal of the property.