Private ruling: CGT - deceased estate
Published: June 2015
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Will the Commissioner exercise his discretion to extend the time period in subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) where the trustee or beneficiary of a deceased estate's ownership interest ends more than two years after the deceased's death? | A1: Yes.

Relevant facts and circumstances: The deceased purchased the property after 20 September 1985. The property was always used as the deceased's main residence. The deceased passed during the relevant financial year. As the deceased died intestate, an administrator was appointed by the court. The administrator rented out the property for a period of time. The property was then put on the market for sale however due to the actions of the tenants there was little interest, hence a request was made for the tenants to vacate prior to the expiry of their lease. As the tenants refused, the property was withdrawn from sale until the expiry of the lease. The property was sold more than two years after the death of the deceased.

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

Reasons for decision: Summary: Subsection 118-195(1) of the ITAA 1997 allows a trustee of a deceased estate to disregard a capital gain or loss from a dwelling that a deceased person acquired after 20 September 1985 if: • 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, or within a longer period allowed by the Commissioner. In your case, the dwelling was the deceased's main residence just before their death, and was not being used to produce assessable income. Although the trustee's ownership interest in the dwelling ended more than two years after the date of the deceased's death, in view of your particular circumstances the Commissioner will exercise his discretion to extend the two year exemption period to the time at which settlement occurred on the sale of the deceased's main residence. The sale of the property will therefore not be subject to CGT.