Private ruling: Capital gains tax – deceased estate – 2 year
Date of advice: 2 February 2018
Published: June 2018
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise his discretion under section 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997) and extend the two year time period for the disposal of the dwelling and up to two hectares? | A1: Yes Having considered your circumstances and the relevant factors, the Commissioner is able to apply his discretion under subsection 118-195(1) of the ITAA 1997 and allow an extension of time until XX January 20XX. Further information on the relevant factors and inheriting a dwelling generally can be found on our website ato.gov.au and entering Quick Code QC52250 into the search bar at the top right of the page.

Relevant facts and circumstances: The deceased died on XX May 20XX. The deceased acquired the property prior to 20 September 1985. The property consisted of land greater than 2 hectares with a dwelling and business use land. The deceased lived in the dwelling as his main residence. Prior to the deceased’s death, the deceased operated a business providing product under a contract with T Pty Ltd, expiring in March 20XX. Letters of Administration ad colligendum bona were granted to the Executors on XX June 20XX to allow continuation of the business activities. The business was managed by a manager who also resided at the dwelling at the time of the deceased’s death. The manager continued to reside at the property and managed the day to day operations of the business until the cessation of the contract with T Pty Ltd. Probate was granted on XX October 20XX. The title of the property was transferred to the Executors of the deceased estate on XX November 20XX. The manager’s employment was terminated in April 20XX and was provided notice on XX May 20XX to vacate the property. The manager did not vacate the property and was formally asked to vacate on XX May 20XX, XX June 20XX and XX June 20XX. Services were disconnected to the property on or about XX June 20XX. The manager requested further time to vacate. An extension to vacate was provided until XX August 20XX. The manager vacated the property and handed over the keys in late September 20XX. On or about XX October 20XX, the Executors took steps to remove rubbish from the property and make it ready to be placed on the market for sale. In November 20XX there was a theft at the property necessitating further clean-up to be undertaken. In December 20XX an agent was engaged to sell the property. On XX January 20XX the former manager made a claim against items on the property. On XX February 20XX notification was given to the selling agent that the property could not proceed to auction until the claim was resolved with the former manager. Attempts to reach an agreement with the former manager, through their lawyer were made between April to July 20XX. A Deed of Settlement was entered into on XX August 20XX to settle the former manager’s claims. Appraisals were obtained for the property and the property was listed for sale at auction on XX October 20XX. The property sold at auction on XX October 20XX and settlement occurred on XX January 20XX.

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