Private ruling: Deceased estate - two year extension
Published: September 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Question and answer | Will the Commissioner exercise his discretion to grant an extension of the two year time period to disregard any capital gain or loss you made when you sold the deceased's property? | No.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. The deceased passed away in 200X. The deceased's two spouses were the beneficiaries of the will. The beneficiaries were also the executors of the estate. Probate was granted in 20XX. During 200X and 20XX, there was a disagreement between the beneficiaries who were also the initial executors of the estate that resulted in the matter being referred to the Court. It was agreed that you would administer the Estate and that the beneficiaries would co-operate with you. The sale of the property took place in 2011.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 118-195(1).

Reasons for decision: Summary: When a person inherits a deceased person's dwelling, they may be exempt or partially exempt when a capital gains tax (CGT) event happens to it (for example, they sell it). Where the dwelling is sold within two years of the deceased's death, the trustee or beneficiary can disregard the capital gain or capital loss resulting from the sale. A trustee or beneficiary of a deceased estate may apply to the Commissioner to grant an extension of the two year time period, where the CGT event happens in the 2008-09 income year or later income years. Generally, the Commissioner would exercise the discretion in situations where the delay is due to circumstances which are outside of the control of the beneficiary or trustee, for example: · the ownership of a dwelling or a will is challenged; · the complexity of a deceased estate delays the completion of administration of the estate; · a trustee or beneficiary is unable to attend to the deceased estate due to unforeseen or serious personal circumstances arising during the two-year period (for example, the taxpayer or a family member has a severe illness or injury); or · settlement of a contract of sale over the dwelling is unexpectedly delayed or falls through for circumstances outside the beneficiary or trustee's control. In exercising the discretion the Commissioner will also take into account whether and to what extent the dwelling is used to produce assessable income and for how long the trustee or beneficiary held the ownership interest in the dwelling. In your case, there was no challenge to the will, the estate was not complex, there were no unforseen or serious personal circumstances that arose during the period, and the settlement of the sale contract was not delayed due to circumstances beyond the beneficiary or trustee's control. The delays were due to the actions of the executors who were also the beneficiaries. The property was used to produce assessable income for almost the entire period between the date of death and the sale of the property. While we acknowledge that the death of a family member can be a very emotional time for the remaining family members, in your case, the circumstances are as such that the Commissioner cannot exercise his discretion to extend the two year time period. Therefore, you cannot disregard any capital gain or loss made when the property was sold.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.