THE Australian Tax Office is upping the ante this financial year on those property owners claiming Capital Gains Tax (CGT) exemptions for main residences. Under the Income Tax Assessment Act of 1997, taxpayers are allowed to sell a property without paying CGT, provided it is classed as their main residence. A recent case under review by the Administrative Appeals Tribunal involving a dispute between property owners and the government highlights the extent to which the government is cracking down on suspect claims. The owners’ claim that they had lived in the property for more than three months was disputed by the government, which provided a list of evidence including the owners’ electricity bills, driver’s licence and electoral roll details. Accountant and Momentum Wealth managing director Damian Collins said investors may be mistaken if they considered themselves exempt from paying CGT on properties once classed as their main residence. “What constitutes a main residence is problematic as there is no definition in the legislation. The act states that you must reside in a property for at least three months but in this case, anyone claiming it will need to be able to prove it,” he said. Mr Collins said the government had gone as far as to review the property’s electricity consumption and compare this with information from the Australian Bureau of Statistics on the average use of electricity of families. “You need to be careful when you are claiming the CGT exemption on property. You simply cannot move some furniture into a property and connect the electricity for three months and claim you were living in the premises,” he said.
