Private ruling: capital gains tax - deceased estate - Commissioner's discretion to extend the two-year period - main residence exemption
Published: June 2013

Ruling: Q1:  | A1: This ruling applies for the following period To 19 July 2014 The scheme commences on 1 July 2012

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are the executor of a deceased estate. The deceased owned and resided in a unit as his main residence. The deceased died approximately two years ago in his unit. The deceased was a reclusive person, so they had little or no contact with their neighbours. Due to the deceased's reclusiveness their neighbours were not able to locate any of their relatives. It was not until approximately 18 months later that contact was made with the deceased's child who resides in a foreign country. It was at this time that the deceased's will was located. The deceased's child did not have regular contact with their parent due to their reclusiveness. The deceased was also estranged from their only sibling. Probate was granted by the Supreme Court early this year The only significant asset of the deceased estate is the unit. The only beneficiary of their will is a hospital foundation. The deceased's child has made a claim against the deceased's estate under the provisions of the Inheritance Act. You are trying to engage all parties in resolving the inheritance claim by negotiation. You believe the following reasons support your request for the Commissioner's discretion to be exercised: · despite reasonable endeavours, the neighbours of the deceased could not readily locate the next of kin of the deceased · the next of kin was not aware of his death due to the deceased's reclusiveness · it was only after the neighbours had located the whereabouts the deceased's child that the will could be located · the terms of the will are being challenged by the deceased's child of the deceased and you believe that she has sufficient grounds to bring an application under the Inheritance Act, and · the circumstances which have given rise to delays in finalising the realisation of the unit were beyond your control or the beneficiary. The unit will be disposed of prior to a specified date.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 118-195.

Reasons for decision: Summary: While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision. Due to recent changed to section 118-195 of the ITTA 1997, the Commissioner now has discretion to extend the two-year period in the Act where: · the ownership of a dwelling or 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 unforseen 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 for sale over the dwelling is unexpectedly delayed or falls through or circumstances outside the beneficiary or trustee's control. In your case, due to the deceased's reclusiveness and the inability of their neighbours to locate their next of kin and the will and now the subsequent challenge by the deceased's child under the Inheritance Act you are unable to dispose of the unit. Accordingly, you meet the criteria in which the Commissioner may exercise his discretion to extend the two-year period in which a deceased's main residence must be disposed of. The Commissioner considers that it is appropriate to exercise his discretion to this occasion and allow up until a specified date to dispose of the unit.

Subject: capital gains tax - deceased estate - Commissioner's discretion to extend the two-year period - main residence exemption: Question: Would the Commissioner exercise his discretion under section 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997) in your particular circumstance?