Private ruling: Capital gains tax
Date of advice: 17 February 2016
Published: April 2016
Ruling period: Year ending 30 June 2016.
Date scheme commenced: 1 July 2015.

Ruling: Q1: Are you liable for capital gains tax resulting from the sale of your property? | A1: No.

Relevant facts and circumstances: You owned a property which was completed by your former spouse in 19XX. There are two assets on the property. In 19XX you became the sole owner of the property as a result of an asset distribution. Property 2 has been rented out. Property 1 has been your principal place of residence. Property 1 was separated by strata title prior to it being sold in 20XX.

Relevant legislative provisions: Income Tax Assessment Act 1997 - Section 102-20 | Income Tax Assessment Act 1997 - Section 104-10 | Income Tax Assessment Act 1997 - Subsection 118-110(1)

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 capital gains tax (CGT) event happening to a CGT asset. CGT assets include real estate acquired on or after 20 September 1985. Section 104-10 of the ITAA 1997 describes the most common CGT event, being CGT event A1. It states that CGT event A1 happens if you dispose of a CGT asset. You dispose of a CGT asset if a change of ownership occurs from you to another entity, whether because of some act or event or operation of the law. The taxation legislation can operate to exempt the capital gain from being included in your assessable income under certain circumstances. Subsection 118-110(1) of the ITAA 1997 provides that a capital gain or loss made by an individual from a CGT event that happens in relation to a dwelling is disregarded if the dwelling was their main residence throughout their ownership period. As Property 1 was your principal place of residence, any gains from this event are disregarded under the main residence exemption.