A recent Administrative Appeals Tribunal decision serves as a reminder to taxpayers that they need to ensure that a house is actually a main residence before claiming the main residence exemption, according to chartered accounting and advisory firm BDO Kendalls.
BDO Kendalls partner, Eddie Chung, says that the case, Erdelyi and Commissioner of Taxation [2007], highlights that the onus is on the taxpayer to prove that any tax assessment isexcessive or incorrect.
“In this case, while the evidence against the taxpayers’ house being their main residence was circumstantial at best, it was not up to the Tax Office to prove that the house was notthe main residence,” Mr Chung says.
“Rather, the taxpayers had to prove that the house was their main residence.”
Mr Chung says the case involved a couple who had purchased a block of land with theirdaughter, on which they constructed a house.
“They sold the house soon after and claimed that it was their primary residence,” Mr Chungsays.
“However, the couple had only moved bare essentials into the dwelling and did not notify any authorities of their change of address