Private ruling: Capital Gains Tax
Published: January 2013

Ruling: Are you entitled to a full main residence exemption if the company uses your home address as its registered office? | Yes. | Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016 | Year ended 30 June 2017 | 1 July 2013

Relevant facts and circumstances: You are the joint owner of a dwelling, which you use as your main residence. You are the director of a Company which has not yet commenced trading but is expected to commence trading soon. The Company will use the dwelling as its registered address and place of business. Work is expected to be conducted at clients' premises. The dwelling is expected to be used as an occasional home office only with no business meetings or clients attending the premises. There will be no business signage at the dwelling. You will not charge the company any rental or occupancy charges. The company will not claim expenses.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 104-10 . | Income Tax Assessment Act 1997 Section 108-5. | Income Tax Assessment Act 1997 Section 118-110. | Income Tax Assessment Act 1997 Section 118-190.

Reasons for decision: Summary: You make a capital gain or capital loss when a capital gains tax (CGT) event happens to a CGT asset. The most common CGT event is CGT event A1 which occurs when a CGT asset is disposed of, such as a dwelling. Generally you can ignore a capital gain or capital loss from a CGT event that happens to a dwelling that is your main residence for the entire period you owned it. However, you may have to pay CGT when you sell a dwelling in which you have used any part of it for business purposes. It is the Commissioner's view that a place of business exists only if: · it is a requirement inherent in the nature of the taxpayer's activities that the taxpayer needs a place of business: o the taxpayer's circumstances are such that there is no alternative place of business and it is necessary to work from home; and o the area is used exclusively or almost exclusively for income-producing purposes. · factors which may indicate whether or not an area set aside has the character of a 'place of business' are: o the area is clearly identifiable as a place of business; o the area is not readily suitable or adaptable for use for private or domestic purposes in association with the home generally; o the area is used exclusively or almost exclusively for carrying on a business; o the area is used regularly for visits of clients or customers. In your situation, you intend to commence a business. It is expected that the majority of work will be conducted on clients' premises and the property will be used as an occasional home office only. Based on the information you have provided, it is viewed that you will not establish any area of the dwelling to be exclusively used for carrying on a business. Therefore, you will remain entitled to the main residence exemption in relation to the dwelling.