The AAT has held that it lacked the jurisdiction to review a private ruling as the ruling dealt with a different decision to that sought by the taxpayers.

In a private ruling application, the taxpayers had sought from the Commissioner that he “confirm taxpayer is within the limits to claim 6 year exemption rule in relation to capital gain on investment property considering the circumstances”. The Tribunal said the taxpayers’ ruling request did not contain a specific question the Commissioner could rule upon, so the Commissioner in a private ruling formulated the question and answer which essentially provided that s 118-145 of the ITAA 1997 did not apply. Attached to the private ruling was also the Commissioner’s “Reasons for decision”, which did not form part of the ruling, but which commented that s 118-135 of the ITAA 1997 also did not apply.

The taxpayers objected to the private ruling, but in doing so, no longer pursued s 118-145, but sought to argue that s 118-135 applied to their circumstances. The Commissioner disallowed the objection and the taxpayers sought a review from the AAT.

The Tribunal agreed with the Commissioner that it had no jurisdiction to review the private ruling with respect to the application of s 118-135 because that provision was not part of the ruling. It said the relevant provision addressed by the private ruling was s 118-145. The Tribunal said it would exceed its jurisdiction if it were to reframe the question asked in the private ruling as being only about the application of s 118-135.

(Re Homeowner 1 & Anor and FCT [2016] AATA 162, AAT, Ref Nos: 2015/4450-4451, 2015/4588-4593, Deutsch DP, 18 March 2016. Note the AAT decision was released publicly on 8 April 2016.)

[LTN 67, 11/4/16]

Extracts from the Income Tax Assessment Act 1997

118-135   Moving into a dwelling
If a *dwelling becomes your main residence by the time it was first practicable for you to move into it after you *acquired your *ownership interest in it, the dwelling is treated as your main residence from when you acquired the interest until it actually became your main residence.

118-145   Absences

118-145(1)   If a *dwelling that was your main residence ceases to be your main residence, you may choose to continue to treat it as your main residence.
118-145(2)   If you use the part of the *dwelling that was your main residence for the *purpose of producing assessable income, the maximum period that you can treat it as your main residence under this section while you use it for that purpose is 6 years. You are entitled to another maximum period of 6 years each time the dwelling again becomes and ceases to be your main residence.
118-145(3)   If you do not use the *dwelling for that purpose, you can treat it as your main residence under this section indefinitely.
118-145(3A)  This section does not apply if the *dwelling was your main residence because of section 118-147 and ceases to be your main residence because of subsections 118-147(3) and (4).
118-145(4)   If you make the choice, you cannot treat any other *dwelling as your main residence while you apply this section, except if section 118-140 (about changing main residences) applies.