Private ruling: Capital gains tax - deceased estate - Commissioner's discretion to extend the two year period
Date of advice: 5 April 2017
Published: September 2017
Ruling period: Year ended 30 June 20YY.
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


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 Explanatory memorandum to the Taxation Laws Amendment Bill (No.9) of 2011 (Cth)

Reasons for decision: Summary: The Commissioner will exercise discretion under subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) by allowing an extension of time until the requested date. | 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.

Relevant facts: The dwelling was the main residence of the deceased. | The deceased left two Wills. | Probate was obtained in an Australian State. | Legal proceeding where commenced in the relevant Court in 20XX. | Mediation between the parties occurred in 20XX. | A contract for the sale of the dwelling was executed in 20YY. | Settlement will occur in 20YY. | The dwelling has not been used to produce assessable income.