Private ruling: The Commissioner’s discretion to extend the two year time limit to dispose of a dwelling
Date of advice: 7 June 2018
Published: August 2018
Ruling period: Year ended 30 June 2019.
Date scheme commenced: 1 July 2018.

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? | A1: Yes.

Relevant facts and circumstances: The deceased acquired a dwelling. The deceased passed away in 2016. The dwelling was the deceased’s main residence. The executors were unsure about the most appropriate way to dispose of the dwelling. The executor’s have now decided to transfer the ownership of the dwelling to the deceased’s child. The deceased’s child has obtained finance to facilitate the purchase of the dwelling. This process has caused a delay. Settlement will occur in 2018.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 subsection 118-130(3) | Income Tax Assessment Act 1997 section 118-195 | Income Tax Assessment Act 1997 subsection 118-195(1)

Reasons for decision: Summary: The Commissioner will exercise his discretion under subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) and allow an extension of time. | Detailed Reasoning - Detailed reasoning: The capital gains provisions allow for concessional treatment to be given to a dwelling that was owned by a deceased person if the executors of the deceased person’s estate sell that dwelling within two years of the date of death. Any capital gain or capital loss made on the sale of such a dwelling is disregarded if the dwelling was: ● Acquired by the deceased before 20 September 1985, or ● The deceased’s main residence when they died. The Commissioner has the discretion to extend the two year period. This extension is generally only granted where the executors are merely arranging the ordinary sale of the dwelling and the cause of the delay is beyond their control (for example, if the will is challenged). There must not be any other factors mitigating against exercising it. The Commissioner accepts that it is appropriate to grant the short extension that you have requested.