Private ruling: Capital gains tax - Deceased estate - extension of two year rule - disposal
Published: August 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Would the Commissioner exercise the discretion in section 118-195 of the Income Tax Assessment Act 1997 in your particular circumstances? | A1: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 104-10 | Income Tax Assessment Act 1997 Section 118-195

Reasons for decision: Summary: Due to recent changes to the Income Tax Assessment Act 1997 (ITAA), the Commissioner now has discretion to extend the two year period in the Act where: The ownership of a dwelling or a will is challenged; The complexity of a deceased estate delays the completion of administration of the estate; A trustee or beneficiary is unable to attend to the deceased estate due to unforeseen or serious personal circumstances arising during the two-year period (for example, the taxpayer or a family member has a severe illness or injury); or Settlement of a contract of sale over the dwelling is unexpectedly delayed or falls through for circumstances outside the beneficiary or trustee's control. These examples are not exhaustive. In this case, you were unable to dispose of the property within two years of the deceased's death due to the will of the deceased being challenged. Accordingly, you meet the criteria in which the Commissioner may exercise discretion to extend the two year period in which a deceased's main residence must be disposed.

Relevant facts: Your parent passed away after 20 September 1985 and you are an executor of the estate | The deceased acquired a property prior to 20 September 1985. | The deceased entered a nursing facility prior to death. | During this period the deceased's property was used to produce income. | The deceased's property continued to be used to produce income for more than two years. | You have been unable to dispose of the property within two years as the will of the deceased was challenged. | During the court proceedings the property was unable to be sold. | The Court proceedings were settled. | The property was prepared for sale and a contract for the sale was signed in the 2013 income year. | The sale of the property has resulted in a capital gain.