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ATO Interpretative Decision

ATO ID 2003/212 (Withdrawn)

Income Tax
Capital gains tax: main residence exemption - accidental destruction of dwelling used for income producing purposes - sale of vacant land

Attention This ATO ID is withdrawn. Guidance on the basis of the decision in this ATO ID can be found in the Guide to capital gains tax (NAT 4151).

Additional guidance can be found in Treating land as your main residence (QC 17187).

Attention This document has changed over time. View its history.
FOI status: may be released
Status of this decision: Decision withdrawn 5 May 2017.

CautionCAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.


Can section 118-160 of the Income Tax Assessment Act 1997 (ITAA 1997) apply to exempt a sale of vacant land following the accidental destruction of a dwelling that was never your main residence?


No. Section 118-160 of the ITAA 1997, which enables you to choose to apply the main residence exemption to a sale of vacant land, requires that a dwelling that is your main residence be accidentally destroyed.


An individual acquires land and a dwelling after 19 September 1985.

The dwelling is used as a rental property throughout the time that it is owned.

The dwelling is destroyed in a cyclone.

The vacant land is sold.

Reasons for Decision

The main residence exemption in Subdivision 118-B of the ITAA 1997 applies to a capital gain or loss from a CGT event that happens to a dwelling that is your main residence (subsection 118-110(1) of the ITAA 1997).

The exemption extends to land that is adjacent to a dwelling (to a maximum area of two hectares including the land on which the dwelling is built) if the land is used primarily for private or domestic purposes in association with the dwelling (section 118-120 of the ITAA 1997). However the exemption does not apply to land if separate CGT events happen to the land and the dwelling other than through a compulsory acquisition under section 118-245 of the ITAA 1997 (section 118-165 of the ITAA 1997).

The main residence exemption can be chosen for a CGT event that happens to vacant land. This is where the CGT event happens to the land after a dwelling that is your main residence is accidentally destroyed (section 118-160 of the ITAA 1997).

You cannot choose for section 118-160 of the ITAA 1997 to apply to the sale of vacant land if, at the time the dwelling was accidentally destroyed, it was not your main residence.

Accordingly, no main residence exemption will be available under Subdivision 118-B of the ITAA 1997 for any capital gain or loss arising from the sale of the vacant land.

Amendment History

Date of amendment Part Comment
26 February 2016 Reasons for Decision Amended for clarity and to reflect changes in the relevant legislation.
  Legislative references Included reference to section 118 245 of the ITAA 1997.

Date of decision: 19 March 2003

Year of income:Year ended 30 June 2003

Legislative references:
Income Tax Assessment Act 1997
   Subdivision 118-B
   subsection 118-110(1)
   section 118-120
   section 118-160
   section 118-165
   section 118-245

Related ATO Interpretative Decisions
ATO ID 2003/213
ATO ID 2003/214

Siebel/TDMS reference number: 3508057; 1-7N00L4W; 1-B0LFZLB

Business line: Small Business/Individual Taxpayers

Date of publication: 4 April 2003

ISSN: 1445-2782

ATO ID 2003/212 (Withdrawn) history   Top  
   Date   Version 
   19 March 2003   Original statement   
   26 February 2016   Updated statement   
 You are here ®   5 May 2017   Withdrawn   


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