Private ruling: capital gains tax
Published: January 2014
Ruling period: Year ended 30 June 2013 | Year ending 30 June 2014
Date scheme commenced: 1 July 2012

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? | A1: Yes.

Relevant facts and circumstances: The arrangement that is the subject of the private ruling is described below. This description is based on the following documents. These documents form part of and are to be read with this description. The relevant documents are: · the application for private ruling, and · the further information received. The deceased purchased a property after 20 September 1985. The deceased passed away during the 2010-11 financial year. Probate was granted in the 2010-11 financial year. The property was placed on the market for sale in the 2013-14 financial year. The property was sold and settlement occurred in the 2013-14 financial year. The property was the main residence of the deceased and was not used to produce income. The estate had multiple beneficiaries. The trustee is also a beneficiary of the estate. It took a significant amount of time to decide and agree on what was going to be done with the property. It took some time to speak to all beneficiaries and obtain approval to sell the property. A number of the beneficiaries wanted to sell the property while others were exploring the option of purchasing the property for themselves. During the 2 years after the deceased passed away a number of beneficiaries were overseas for extended periods. This made the sale process harder to finalise.

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

Reasons for decision: Summary: Subsection 118-195(1) of the ITAA 1997 states that if you own a dwelling in a capacity as trustee of a deceased estate, then you are exempt from tax on any capital gain made on the disposal of the property if: · the property was acquired by the deceased after 20 September 1985 and the dwelling was the deceased's main residence just before the deceased's death and was not then being used for the purpose of producing assessable income, and · your ownership interest ends within 2 years of the deceased's death (the Commissioner has discretion to extend this period in certain circumstances). The Commissioner can exercise his discretion in situations such as where: · 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 You have an ownership interest in a property if you have a legal interest in the property. This means that if you sell a property, your ownership interest continues until the date of settlement (rather than the date the contract of sale is signed). The deceased purchased the property after 20 September 1985. It was their main residence until they passed away. Having considered the relevant circumstances, the Commissioner will exercise his discretion and extend the 2 year time limit.