Private ruling: CGT - deceased estate extension of time
Date of advice: 27 July 2016
Published: September 2016
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? | A1: Yes, to late 20XX.

Relevant facts and circumstances: The deceased passed away. The property was the deceased's main residence at the time of their death. The deceased acquired the property prior to 20 September 1985. A company approached you to purchase the property and other surrounding properties in XXX 20XX, and negotiations began. In XXX 20XX, you signed a contract with the company. The company has encountered issues with obtaining finance for the project. Consequently, there has been a lengthy settlement period and the property is expected to settle in late 20XX.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 118-195.

Reasons for decision: Summary: Subsection 118-195(1) of the ITAA 1997 states that if you are an individual who owns 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 before 20 September 1985; and • your ownership interest ends within two years of the deceased's death (the Commissioner has discretion to extend this period in certain circumstances). In your case, the property has not been sold within the two year time limit. Therefore, you will only be able to disregard the capital gain from the sale of the property if the Commissioner grants an extension to the two year time limit. 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 In your case, the delay in the disposal of the property was due to delays with the settlement of the property. Having considered the relevant facts, the Commissioner is able to apply his discretion under subsection 118-195(1) of the ITAA 1997 and allow an extension to the two year time limit. Accordingly, you will be entitled to disregard the capital gain on the sale of the property if the property is sold by dd/mm/yyyy.