Private ruling: Capital gains tax – deceased estate – Commissioner’s discretion
Date of advice: 19 December 2017
Published: May 2018
Ruling period: Year ended 30 June 201A.
Date scheme commenced: 1 July 201Z.

Ruling: Q1: Will the Commissioner exercise his discretion under subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) and allow an extension of time to the two year period? | A1: Yes.

Relevant facts and circumstances: The deceased acquired a dwelling (The dwelling) The deceased passed away in 201X. (The deceased) The dwelling was the deceased’s main residence. The executor of the estate was diagnosed with a serious medical condition in 201Y. The executor’s medical condition delayed them attending to administering the estate until their condition stabilised. The executor’s condition improved and they were able to attend to the estate from 201Z. The executor appointed a real estate agent in 201Z. The dwelling was listed for sale by auction in 201Z. The dwelling was sold at auction and settlement took place a short time later in 201Z.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10 | 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)

Reasons for decision: Summary: The Commissioner will exercise his discretion under subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) and allow an extension of time. | Detailed Reasoning - Detailed reasoning: The capital gains provisions allow for concessional treatment to be given to a dwelling that was owned by a deceased person if the executors of the deceased person’s estate sell that dwelling within two years of the date of death. Any capital gain or capital loss made on the sale of such a dwelling is disregarded if the dwelling was: ● Acquired by the deceased before 20 September 1985, or ● The deceased’s main residence when they died. The Commissioner has the discretion to extend the two year period. This extension is generally only granted where the executors are merely arranging the ordinary sale of the dwelling and the cause of the delay is beyond their control (for example, if the will is challenged). There must not be any other factors mitigating against exercising it. The delay in disposing of the dwelling was due to you being unable to attend to the deceased estate due to serious personal circumstances arising during the two year period. The Commissioner accepts that it is appropriate to grant the short extension that you have requested.