Private ruling: Deceased estate exemption for Capital Gains Tax
Date of advice: 6 February 2018
Published: June 2018
Ruling period: Period ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise his discretion under subsection 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997) and allow an extension of time to the two year period applied to the share of the property owned by the Estate? | 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. 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. Note: Subsection 118-120(3) of the ITAA 1997 specifies the maximum area of land that is covered by the main residence exemption (including the area under the dwelling) must not exceed 2 hectares. As the property exceeds two hectares in total, only the capital gain relating to the two hectares which includes the main residence dwelling, will be exempt under subsection 118-195(1) of the ITAA 1997.

Relevant facts and circumstances: A person passed away. The property was the main residence prior to death. The property was purchased prior to 1985 held as tenants in common. The person’s partner passed away earlier in the year. At the date of death the property was still held as tenant in common as the person’s partner’s estate was not finalised. Litigation proceedings against the estate by an eligible person pursuant to the Succession Act were finalised. Probate was granted. The property was listed for sale until date of offer. A transmission application was registered in respect of the property and the title to the property was transferred into the names of the two executors in their capacity as executors of the estate. The property comprised over XX hectares of remote rural land with a dilapidated house. A contract for sale was exchanged with a negotiated six month settlement period as a condition of the sale due to the lack of previous offers. Settlement of the property took place.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 subsection 118-120(3 | Income Tax Assessment Act 1997 subsection 118-130(3) | Income Tax Assessment Act 1997 section 118-195 | Income Tax Assessment Act 1997 subsection 118-195(1)