Private ruling: Capital gains tax – deceased estate (2 year discretion)
Date of advice: 28 August 2018
Published: October 2018
Ruling period: 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 2 year period? | A1: Yes. In this case the complexities that arose in regards to finalising the estate were attributed to the delays in relation to the completion of the administration of the estate. Having considered the circumstances and the factors outlined below, the Commissioner is able to apply his discretion under subsection 118-195(1) of the ITAA 1997 and allow an extension of time.

Relevant facts and circumstances: The deceased passed away in XXXX. The property was acquired by the deceased in XXXX. The deceased used the property as their main residence for the entire ownership period. The property was never used for income producing purposes. The deceased’s child A (“you”) and the deceased’s child B (“your sibling”) were appointed as executors on the will. Your Child B had previously lived in the property with the deceased and decided to continue to reside in the property after the deceased’s passing, without any legal interest in the property as they believed that they would be inheriting the property. There was no right to occupy clause stipulated in the will, nor any indication to support your siblings claim that they would inherit the property. However your sibling continued to reside in the property. You disputed these claims and engaged a solicitor to conduct negotiations with your sibling to attempt to reach an agreement regarding the property. Probate of the will was granted and you were appointed as the legal personal representative of the estate. During this time of trying to reach an agreement your sibling was uncooperative and avoided many interactions of communication to resolve the issue, despite continued efforts by you to resolve the dispute. Your sibling was unwilling to compromise or adhere to the terms of the will. Your sibling then lodged a court application seeking readjustment of the will. An official mediation commenced in XXXX, however no agreement was reached. The matter went to trial in XXXX. An agreement was reached and Terms of Settlement were executed. The Court approved the Terms of Settlement and distribution to the beneficiaries in XXXX. The property settled and the transferred occurred in XXXX. The delay in selling the property was due to the complexity of dealing with the estate matters and the issues having to be resolved through court which was outside your control.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 118-195(1)