Private ruling: Capital gains tax - deceased estate - Commissioner's discretion
Date of advice: 30 March 2017
Published: August 2017
Ruling period: Year ended 30 June 2017.
Date scheme commenced: 1 July 2016.

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 client resided at their home since purchasing the property in the early 1980's until their death. Probate of the last Will and Testament of the client was granted to The Public Trustee. Finalisation and administration of the estate was delayed due to the inability to locate one of the beneficiaries. Authority for disposal of the property was received. Instructions were given to the Official Solicitor to prepare a Deed of Family Arrangement. Signed copies of the Deed of Family Arrangements were received from the Beneficiaries. Administrative delays occurred in the Titles office. New documents had to be signed by all beneficiaries and relodged with the titles office. Further delays occurred when one of the beneficiaries incorrectly signed the transfer document and it had to be drafted again. The Property was finally transferred into the beneficiaries' names. The property was then able to be placed on the market and sold.

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: 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 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 the complexity of the deceased estate which delayed the completion of the administration of the estate. The Commissioner accepts that it is appropriate to grant the short extension that you have requested.