Private ruling: Capital gains tax - main residence exemption - absences
Date of advice: 17 June 2016
Published: August 2016
Ruling period: Year ending 30 June 2016 | Year ending 30 June 2017
Date scheme commenced: 1 July 2015

Ruling: Q1: Have you re-established the property as your main residence and once again able to utilise the absence rule pursuant to section 118-145 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes.

Relevant facts and circumstances: You have returned to your main residence, after a period of absence. During your absence the property was rented out for a majority of that time. You utilised the absence rule, pursuant to section 118-145 of the ITAA 1997, during that period of absence. Since your return, you have resided in the property for three months. Your personal belongings are located in the property. Your address on the electoral roll is the address of the property. Your mail is being delivered to the address of the property. All services to the property are connected in your name. You now intend to be absent from the property once again and wish to rent out the property while you are absent. You wish to utilise the absence rule, pursuant to section 118-145 of the ITAA 1997, for this period of absence.

Relevant legislative provisions: Income Tax Assessment Act 1997 subdivision 118-B, | Income Tax Assessment Act 1997 section 118-110 and | Income Tax Assessment Act 1997 section 118-145.

Reasons for decision: Summary: Section 118-110 of the ITAA 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 the 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. In determining whether a dwelling is your main residence, the following factors may be relevant: • 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 A mere intention to occupy a dwelling as your main residence without actually doing so is not sufficient to get the exemption. As a general rule, a dwelling is no longer your main residence once you stop living in it. However under section 118-145 of the ITAA 1997 you can choose to have a dwelling treated as your main residence for capital gains tax (CGT) purposes even though you no longer live in it. If you make this choice, you cannot treat any other dwelling as your main residence for that period. Furthermore if you use the dwelling to produce income you can choose to treat it as your main residence for up to six years after you cease living in it. However if you do not use it to produce income you can treat the dwelling as your main residence for an unlimited period after you cease living in it. In your circumstances: • you have resided in the property for three months, • your personal belongings are located in the property, • your mail is being delivered to the address of the property, • your address on the electoral roll is the address of the property and • all services to the property are connected in your name. Therefore, in light of the above, we have determined that you have re-established the property to be your main residence, and would be able to utilise the absence rule pursuant to section 118-145 of the ITAA 1997.