Private ruling: Capital gains tax – deceased estates – Commissioner’s discretion to extend the two year period – main residence exemption.
Date of advice: 7 February 2019
Published: May 2019
Ruling period: Year ending 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 allow an extension of time to the two year period in relation to the deceased’s 50% original interest in X and the deceased’s 50% original interest in Y? | A1: Yes. Having considered your circumstances and the relevant factors, the Commissioner will allow an extension of time. Further information about this discretion can be found by searching 'QC 52250' on ato.gov.au

Relevant facts and circumstances: The taxpayer and their spouse purchased a property prior to 20 September 1985 (the Property ). The Property consisted of a house and X units. The taxpayer and their spouse resided in the house as their main residence. The spouse passed away after 20 September 1985 and their share of the Property passed to the taxpayer. The taxpayer now owned a 50% pre CGT interest (original interest) in the Property and a 50% post CGT interest (inherited interest) that passed to the taxpayer upon the death of the spouse. Several years later X townhouses were built on a portion of the land and the land was subdivided into X separate titles. The plan for Subdivision was lodged in 20XX. The Property now consisted of the main residence and various buildings. The taxpayer passed away (the deceased). Probate was granted for the estate in 20XX. The Will was challenged and a Family Provisions Claim was first made X months later. The Claim was settled by mediation within X months. The dwelling had to be disposed of pursuant to those orders and the executor subsequently made arrangements for the sale of the Property (together if possible). It was resolved that the Property was to be sold at auction and the executor was required to source the most appropriate agent to sell the Property due to its unusual nature. An agreement to sell the Property was made with a real estate agent shortly after. The Property sold at auction for a total of $X! Due to the unusual nature of the property, a X month settlement was negotiated by the purchaser. Settlement occurred more than two years after the deceased’s death.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 subsection 118-130 | Income Tax Assessment Act 1997 section 118-195