Capital Gains Tax: main residence exemption - residence owned by company

Is the main residence exemption in Subdivision 118-B of the Income Tax Assessment Act 1997 (ITAA 1997) available to a company that owns a dwelling?

No. The main residence exemption in Subdivision 118-B of the ITAA 1997 is not available to a company that owns a dwelling.

The taxpayer, a company, made a capital gain from the disposal of a dwelling that it acquired after 19 September 1985. The directors of the company lived in the property throughout the company's ownership period of the dwelling.

Section 118-110 of the ITAA 1997 provides that a capital gain or capital loss made by a taxpayer from a CGT event happening to a CGT asset that is a dwelling or to an 'ownership interest' in a dwelling is disregarded, if certain conditions are met. One of the conditions is that the taxpayer is an individual (paragraph 118-110(1)(a) of the ITAA 1997). 'Individual' is defined in subsection 995-1(1) of the ITAA 1997 to mean a natural person. A company is not an individual. It follows that the main residence exemption in Subdivision 118-B of the ITAA 1997 does not apply in respect of a dwelling owned by a company, even though the directors of the company lived in the property throughout the ownership period.