Abigail has requested that you review the client file so that any issues can be mapped out ahead of the scheduled meeting with the client early next week. The client files include notes taken from an initial phone conversation as well as some documents provided by the client.

Client Number: 99975 Client's Preferred Name: Maxine Robinson Client Meeting: 12 August 2022

Item 1: Meeting notes prepared by Abigail (tax practitioner) and Maxine (client)

Maxine has been living in Horsham, Victoria since 2014, on a acre property Maxine and Nathan (her partner) had purchased jointly at that time.

Maxine completed an animal behaviour degree at the end of 2020 and had been looking for work since. In August 2021, Maxine found employment as a consultant for a small sustainability firm in Warrnambool. The contract includes an annual salary, which $62,000 plus superannuation has been received in the 2022 income tax year. Maxine was required to purchase wet weather gear and other protective clothing at her own expense, totalling $660. Her employer reimbursed her for the total amount and also provided her with a hand-held radio transceiver (cost $270) and tablet computer (cost $1,599 plus case $210) for whilst she is on site visits.

Due to the closer proximity to her new employer, Maxine and Nathan decided to move into their investment property located in Warrnambool. Maxine and Nathan acquired the property in August 2020, which is made up of a modern brick home on a small suburban block. Maxine and Nathan moved into the property in September 2021. Maxine was against selling the Horsham property, so they decided to rent it out. Tenants moved in as soon as Maxine and Nathan moved out (also in September 2021). In January 2022, their joint interest-bearing account was closed, and Maxine transferred the remaining balance (including Nathans share at his request) into an interest-bearing account in her name only.

Available property information: Investment property, Warrnambool: 01 August 2020 Purchased - $650,000 01 August 2020 Settlement/legal fees $6,732

Horsham Property: 30 November 2014 Purchased - $650,000 30 November 2014 Settlement/legal fees $6,350

Real estate agent valuation on Horsham property September 2021: $1,052,000

Item 2: Bank Statements

Over the course of the day, Abigail has asked you a few questions to ensure you are ready for the upcoming meeting and to pre-empt some of the questions that might come up. REQUIRED:

Respond to Abigails enquiries by answering the following questions. Ensure you refer to appropriate legislation and case law and show all workings and explanations/ You must show a complete analysis

QUESTION :

Assuming the Warrnambool property becomes Maxines main residence for the purposes of Subdivision 118 of ITAA97 in September 2021, discuss the implications to the main residence exemption for each property.