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1 Is Property A a dwelling that was your main residence from on or after XX XX 20XX for the purposes of Subdivision 118-B of the Income Tax Assessment Act 1997 (ITAA 1997)?

1 Yes. Question 2 Are you able to make an absence choice for Property A under section 118-145 of the ITAA 1997 from XX XX 20XX until XX XX 20XX? Answer 2 Yes. Question 3 If the answers to Questions 1 and 2 are 'yes', are you able to make a further 'absence choice' under section 118-145 of the ITAA 1997 for each additional occasion of absence where Property A is used to produce assessable income up to a maximum of 6 years in each instance? Answer 3 Yes. This ruling applies for the following periods : Income tax year ending 30 June 20XX Income tax year ending 30 June 20XX The scheme commenced on: 1 July 20XX

You are a husband and wife who purchased Property A as joint tenants. You first used Property A to derive rental income. The Property is offered as a form of short-term holiday rental accommodation. Property A is managed by a property manager who takes bookings 12 months in advance. When Property B was sold there were existing bookings at Property A for the next 12 months that you were obliged to honour. Property A commences as main residence You purchased Property A as a dream home and location to settle in once your children had finished schooling, work commitments reduced and Property B was sold. Your youngest child finished high school at the end of 20XX. You moved various personal items into Property A between XX XX 20XX and XX XX 20XX. After the sale of Property B, you considered Property A as your main residence and did not treat any other dwelling as your main residence. During the period XX XX 20XX to XX XX 20XX, you were able to spend time at Property A (including many overnight stays) for approximately XXX days.

You were able to fully establish yourselves into Property A during the period from XX XX 20XX to XX XX 20XX. It was during this period that you were first able to have overnight stays post the sale of Property B. You could not stay earlier than XX XX 20XX or later than XX XX 20XX as there were bookings in place. Person A was involved in the sale of your business which settled on XX XX 20XX. After the sale was completed, you travelled overseas and you returned to Australia on XX XX 20XX. Property A was booked on your return until XX XX 20XX. You closed off bookings at Property A from XX XX 20XX until XX XX 20XX. After this date Property A was heavily booked for the remainder of the year. You changed your mailing address to Property A in XX XX 20XX (after the sale of Property B) in relation to the following items: •         Credit cards; •         Energy bills; •         Drivers licence; and •         Electoral roll. The body corporate and water utilities are in joint names. The electricity is in Person B's name. Your mailing address for your bank statements are either digital or go to a PO Box in City A which can be accessed by your administrative support.

The Workcover policy for household workers is taken out in the name of Person A from XX XX20XX. There is no phone or gas connections at Property A. Your residential address for all companies where you are officeholders and shareholders was updated on XX XX 20XX to Property A. Your children also stay at Property A from time to time when they visit you. You have friends who live in City B and you also spend time with friends who are holidaying there. Current and expected future living arrangements You were unable to reside at Property A on a full-time basis for a multitude of reasons. In particular, when you are not in City B, you would spend time in various locations in the state and overseas. You continue to rent Property A but also stay at Property A when you are not travelling. When you are away from Property A, you maintain a separate lock up space for your toiletries, pillows, clothing and a separate fridge that guests are not able to access. There is also a separate lock up garage which is not accessible to guests which can house your vehicles and personal belongings.

You have not chosen any other property to be your main residence since the sale of the Property B, other than Property A. At this stage you do not intend on selling Property A but are seeking comfort in this application in relation to the Property A and the application of Subdivision 118-B of the ITAA 1997.

Income Tax Assessment Act 1997 section 104-10 Income Tax Assessment Act 1997 section 118-110 Income Tax Assessment Act 1997 section 118-115 Income Tax Assessment Act 1997 section 118-130 Income Tax Assessment Act 1997 section 118-145

Issue 1 Question 1 Summary On the facts provided, you are eligible for Property A to be treated as your main residence under Subdivision 118-B of the ITAA 1997 from on or after XX XX 20XX. Detailed reasoning CGT event A1 under section 104-10 of the ITAA 1997 happens if an entity disposes of a CGT asset. A CGT asset includes an interest in real property under section 108-5 of the ITAA1997. Subsection 118-110(1) of the ITAA 1997 states: A capital gain or capital loss you make from a CGT event that happens in relation to a CGT asset that is a dwelling or your ownership interest in it is disregarded if: a)            you are an individual; and b)            the dwelling was your main residence throughout your ownership period; and c)            the interest did not pass to you as a beneficiary in, and you did not acquire it as a trustee of, the estate of a deceased person. Broadly, this exemption may not apply in full if the dwelling was your main residence during part of your ownership period or (subject to the application of section 118-145 of the ITAA 1997) the dwelling was used for the purpose of producing assessable income.

'Ownership period' is defined in section 118-125 of the ITAA 1997 as the period on or after 20 September 1985 when you had an ownership interest in the dwelling (or land on which the dwelling is later built). In accordance with subsections 118-130(2) and (3) of the ITAA 1997, you have an ownership interest in a dwelling that you acquire under a contract from the time when you obtain the legal ownership of it (unless you have a right to occupy the dwelling at an earlier time) and, where the dwelling is disposed of under a contract, your ownership interest ends when your legal ownership of it ends. You only get a partial exemption if the dwelling was used as your main residence for part of the period of ownership (section 118-185 of the ITAA 1997). The testing for determining whether a dwelling is a main residence is contained in Subdivision 118-B of the ITAA 1997. 'Dwelling' is defined in subsection 118-115(1) of the ITAA 1997 to include: a)            a unit of accommodation that: i.                is a building or is contained in a building; and ii.                consists wholly or mainly of residential accommodation; and

b)            a unit of accommodation that is a caravan, houseboat or other mobile home; and c)            any land immediately under the unit of accommodation. 'Dwelling' is not otherwise defined and so takes on its ordinary meaning. The Macquarie Dictionary defines 'dwelling' as 'a place of residence or abode; a house'. In Campbell v O'Sullivan [1947] SASR 195 at 201, May J stated that: ..."dwelling" ordinarily signifies a place of abode or residence, a tenement, habitation or house, which premises a person or persons are using as a place for sleeping and usually for the provision of some meals. Whether a dwelling is your main residence depends on the actions of you and your family. The 'Guide to capital gains tax 2025' at QC 104764 states that generally a dwelling is considered your main residence if: •                     you and your family live in it; •                     your personal belongings are in it; •                     it is the address your mail is delivered to; •                     it is your address on the electoral roll; •                     services such as gas and power are connected; and •                     you occupy the dwelling as your home.

A mere intention to construct or occupy a dwelling as your main residence, without actually doing so, isn't sufficient to get the exemption. The length of time you stay in the dwelling can be relevant. It has also been said in AAT Case 26/93 (1993) 93 ATC 320 in terms of the predecessor provision (being the former subsection 160ZZQ(12) of the ITAA 1936 and the usage there of the phrase 'principal residence') that: 10. As the Tribunal sees it, the term may be interpreted according to its ordinary, lexical meaning. ''Principal'', when used as an adjective, is relevantly defined in the Shorter Oxford Dictionary as ''first in rank or importance; chief; leading'' (with similar meanings given in the Macquarie Dictionary). Application to your circumstances You acquired Property A and after the sale of Property B in XX XX 20XX you honoured the bookings for Property A to be used for income producing purposes. On the information provided and on balance, Property A is accepted as satisfying the testing of a main residence for the purposes of Subdivision 118-B of the ITAA 1997 from XX XX 20XX given the presence of the following factors:

•                     you have moved personal belongings into Property A; •                     you have resided at Property A for significant periods of time; •                     you have changed your address for credit cards, energy bills and your drivers licences to Property A; •                     you have changed your address on the electoral roll to Property A; •                     you have put the body corporate and water utilities of Property A in your joint names; •                     you purchased Property A as a dream home and location to settle in once your children had finished schooling and work commitments reduced; and •                     you now stay at the Property when you don't have commitments elsewhere and are not travelling. Question 2 Summary You are able to make an absence choice under section 118-145 of the ITAA 1997 for the full period of your absence as it is for a period of less than 6 years. Detailed reasoning

Section 118-145 of the ITAA 1997 sets out rules that may extend the exemption. Subsection 118-145(1) of the ITAA 1997 provides that you can choose to continue to treat a dwelling as your main residence if it ceases to be your main residence. The period for which the dwelling can continue to be treated as your main residence depends on whether or not it is used for the purpose of producing assessable income. Subsection 118-145(2) of the ITAA 1997 states that, on each occasion you use the part of the dwelling that was your main residence for the purpose of producing assessable income, you can continue to treat it as your main residence for the period of absence up to a maximum of 6 years each time. In contrast, and pursuant to subsection 118-145(3) of the ITAA 1997, if you do not use the dwelling for an assessable income producing purpose, you can treat it as your main residence under section 118-145 of the ITAA 1997 indefinitely. The example at the end of section 118-145 of the ITAA 1997 illustrates the operation of subsection 118-145(2) of the ITAA 1997: Example:

You live in a house for 3 years. You are posted overseas for 5 years and you rent it out during your absence. On your return you move back into it for 2 years. You are then posted overseas again for 4 years (again renting it out). You then move back into it for 3 years, after which you sell the house. You have not treated any other dwelling as your main residence during your absences. You may choose to continue to treat the house as your main residence during both absences because each absence is less than 6 years. You can make this choice when preparing your income tax return for the income year in which you sold the house. Application to your circumstances You are eligible to make an absence choice as the period of absence on this occasion is less than 6 years. If you make an absence choice you can continue to treat the property as your main residence during this period of this absence notwithstanding that it was used to produce assessable income. Question 3 Summary

For each further absence that is for a period of less than 6 years (for example the period from XX XX 20XX to XX XX 20XX), you will be able to make a separate absence choice under subsection 118-145(2) of the ITAA 1997. Detailed reasoning Subsection 118-145(2) of the ITAA 1997 states on each occasion you use the dwelling that was your main residence for the purpose of producing assessable income, you can continue to treat it as your main residence for the period of absence up to a maximum of 6 years each time. The example at the end of section 118-145 of the ITAA 1997 illustrates the operations of subsection 118-145(2) of the ITAA 1997. Application to your circumstances For each further period of absence where the property is used for producing assessable income you will be able to make an absence choice under subsection 118-145(2) of the ITAA 1997 for a period of up to 6 years.