Private ruling: Capital gain tax - main residence exemption
Date of advice: 22 December 2016
Published: June 2017
Ruling period: Year ending 30 June 201X
Date scheme commenced: 1 July 201X

Ruling: Q1: Are you able to disregard any capital gains tax on your property, as per section 118-145 of the Income Tax Assessment Act 1997? | A1: No

Relevant facts and circumstances: You purchased a property in early 20XX. Shortly after purchasing the property, you were diagnosed with an illness. You lived with family following your diagnosis. You tenanted the property from early-mid 20XX. You decided to sell the property in mid-late 201X. You have never lived in the property.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 102-20 | Income Tax Assessment Act 1997 section 118-110 | Income Tax Assessment Act 1997 section 118-145

Reasons for decision: Summary: Section 102-20 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that you make a capital gain or loss as a result of a CGT event. The most common event is CGT event A1 which occurs when a person disposes of a CGT asset. In your case, when you sell the property it would be considered a CGT A1 event. Generally, 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 the 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. Taxation Determination TD 51W (TD 51W) states that whether a dwelling is a taxpayer's main 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 taxpayers 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of services such as telephone, gas and electricity ● the taxpayers intention in occupying the dwelling While TD 51W is withdrawn, the factors are still relevant when determining when a dwelling is a person's principle residence. A mere intention to occupy a dwelling as your main residence without actually doing so is not sufficient to qualify for the exemption. While we appreciate you intended to move into the property but were unable due to illness, you did not move into the dwelling and therefore the main residence exemption cannot apply. Whilst we acknowledge the unfortunate circumstances, the main residence exemption cannot apply in your circumstances, and there is no discretion that the Commissioner can exercise to disregard any capital gain or loss that you may have made on the disposal of the property.