Private ruling: Capital gains tax – deceased estate – main residence - EOT
Date of advice: 18 April 2018
Published: July 2018
Ruling period: Year ending 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Will the Commissioner exercise his discretion under subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) and extend the two year time period to DD/MM/YYYY? | A1: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 118-195 Detailed reasoning | A capital gain or capital loss you make from a capital gains tax (CGT) event that happens in relation to a dwelling is disregarded if: | ● you owned it as the trustee of a deceased estate | ● the deceased acquired the dwelling on or after 20 September 1985 | ● the dwelling was the deceased’s main residence just before the deceased’s death and the dwelling was not then being used for the purpose of producing assessable income, and | ● you dispose of the dwelling within 2 years of the deceased’s death, or within a longer time period allowed by the Commissioner (subsection 118-195(1) of the ITAA 1997). | You satisfy all of the above conditions except that you did not dispose of the dwelling within 2 years of the deceased’s death. Therefore, you will only be able to disregard the capital gain you made on the sale of the dwelling if the Commissioner extends the 2 year time limit. | Generally, the Commissioner allows a trustee a longer time period to dispose of a dwelling where the delay is due to circumstances which are outside of the trustee’s control, such as when the ownership of a dwelling or a will is challenged, or the complexity of a deceased estate delays the completion of administration of the estate. | In determining whether or not to allow a longer time period to dispose of the property the Commissioner also takes into account whether and to what extent the dwelling is used to produce assessable income and for how long the trustee owned the dwelling. | In this case, the will was challenge and the property was sold soon after the court case was finalised. The property was only used to produce assessable income while the case was in court and this use did not delay the sale of the property. | Such circumstances are a situation in which the Commissioner can exercise his discretion. Having considered the relevant circumstances, the Commissioner will exercise his discretion and extend the two year time period to DD/MM/YYYY.


Relevant facts: The deceased acquir ed a property after 20 September 1985. The property was the deceased’s main residence and was not used by the deceased for the purpose of producing assessable income. | The last Will and Testament was disputed. | The court case was finalised and probate was granted. | The property was listed with an agent and sold a few months after probate.