Private ruling: CGT – Deceased Estate – Commissioner’s discretion to extend the two-year period – main residence exemption
Date of advice: 28 September 2018
Published: November 2018
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise his discretion under subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) and allow an extension of time to the two year period to XX June 20XX? | A1: Yes Due to delays caused by the estranged spouse refusal to vacate the property and subsequent court proceedings, the property was unable to be sold within two years of the deceased’s death. Having considered all the above facts, the Commissioner is able to apply his discretion under subsection 118-195(1) of the ITAA 1997 and allow an extension of the main residence exemption beyond the two year time limit to the financial year ended 30 June 20XX.

Relevant facts and circumstances: The deceased and their spouse purchased a property. The property is less than 2 hectares in size. The deceased and their spouse occupied the property until they separated in 20XX, prior to the deceased’s death. The deceased died on XX January 20XX. The estranged spouse became the sole proprietor as the surviving joint tenant and returned to live in the property. A consent order was obtained in November 20XX which required the property to be sold. The sale of the property could not occur due to the estranged spouse’s refusal to vacate the property, despite the Court’s orders made in 20XX. Letters of Administration were granted with an informal Will annexed on XX April 20XX. Administration of the estate could not occur until XX July 20XX after construction of the Will was determined by the proceedings. On XX May 20XX, the estranged spouse vacated the property and provided vacant possession. On XX June 20XX the property was sold by way of public auction.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 118-195(1) | Income Tax Assessment Act 1997 subsection 118-195