Private ruling: Capital gains tax – deceased estate and the Commissioner’s discretion to extend the two year period for a main residence exemption
Date of advice: 9 April 2019
Published: May 2019
Ruling period: Year ending 30 June 2018
Date scheme commenced: 1 July 2017

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 until settlement? | A1: Yes. Having considered your circumstances and the relevant factors, the Commissioner will allow an extension of time. Further information about this discretion can be found by searching 'QC 52250' on ato.gov.au. | Q2: Can you disregard any capital gain or loss that arises from the disposal of the property under section 118-195 of the ITAA 1997? | A2: Yes. As the property was purchased before September 1985 and the Commissioner has extended the two year period to dispose of the dwelling, any capital gain or loss can be disregarded.

Relevant facts and circumstances: The deceased died on XX June 20XX. The Public Trustee was subsequently appointed administrator of the deceased’s estate. The deceased acquired a property prior to 20 September 1985 and elected it as their principle place of residence until their death. At the time of death the deceased did not have a will. The property was not used for income producing purposes at any time during the deceased’s ownership and it remained vacant after their death until it was sold. The settlement of the property was delayed as there was considerable difficulty in establishing the beneficiary of the estate due to the fact the deceased passed away without a will and there was a significant delay in determining the beneficiary of the estate. The dwelling was sold on XX August 20XX. Settlement occurred on XX September 20XX.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 section 118-195