Private ruling: Capital gains tax main residence exemption
Date of advice: 4 December 2018
Published: March 2019
Ruling period: Year Ended 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Will the Commissioner allow an extension of time to 30 July 2018 for you to dispose of your ownership interest in the dwelling and disregard the capital gain you make on the disposal? | A1: Yes. Having considered your circumstances and the relevant factors, the Commissioner will allow an extension of time. Further information about this discretion can be found by searching 'QC 52250' on ato.gov.au.

Relevant facts and circumstances: The deceased acquired a residential property prior to 1985 . The deceased passed away . The dwelling on the property was the principal place of residence of the deceased up to the time of death and the residence has not been used to produce any income. The Trustees are the deceased’s child and sibling. Probate was granted. The property was held by you as Trustees of the Estate from the date of death until its eventual sale and transfer. The property was therefore held by you for two years and 39 days. Under the deceased’s will, the dwelling was bequeathed for sale or conversion into money and to be held on trust for four individuals. The individuals were not the deceased’s spouse nor were they granted a right to occupy the dwelling under the will. A contract for sale was entered into for the sale of the deceased’s home and settlement was due within the two year period from the date of death. There was an unexpected delay in the settlement occurring due to the purchaser experiencing problems with their lender. This was due to the purchaser’s lender being unfamiliar with stamp duty exemptions applicable in deceased estate transactions and it being a related party transaction. The stamp duty issue caused the delay which led to a later settlement date. The property settled and has been transferred to the purchasers. One of the purchaser’s is the child of the deceased and a beneficiary. The other purchaser is the child’s spouse. The child lived in the property caring for the deceased prior to their death. The child then returned to their residence in an overseas country awaiting their spouse’s visa and then returned to live at the property. To be eligible for finance the child’s spouse needed to obtain full time employment and a permanent residency certificate in Australia. There were delays with the immigration department which led to delays with obtaining finance to enter into the contract. The deceased’s sibling was staying at the property for several weeks each time while the deceased’s child was in the overseas country. Upon the return of the deceased’s child, they and their spouse took up residence at the property and have remained there since. The total area of the adjacent land on which the dwelling stands is not more than two hectares.

Relevant legislative provisions: Income Tax Assessment Act 1997 s ection 104-10, | Income Tax Assessment Act 1997 subsection 118-130(3) and | Income Tax Assessment Act 1997 section 118-195 | Income Tax Assessment Act 1997 subsection 118-195(1).