Private ruling: An extension of time to the two year exemption from capital gains tax for a deceased’s main residence
Date of advice: 5 July 2018
Published: September 2018
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 7 January 2016

Ruling: Q1: Will the Commissioner exercise his discretion under 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) and allow an extension of time to the two year period until DDMMYY? | A1: Yes Subsection 118-195(1) of the ITAA 1997 states that if you own a dwelling in your capacity as trustee of a deceased estate (or it passed to you as a beneficiary of an estate), then you are exempt from tax on any capital gain made on the disposal of the property if: ● the property was acquired by the deceased before 20 September 1985, or ● the property was acquired by the deceased on or after 20 September 1985 and the dwelling was the deceased’s main residence just before the deceased’s death and was not then being used for the purpose of producing assessable income, and your ownership interest ends within two years of the deceased’s death (the Commissioner has discretion to extend this period in certain circumstances). You have an ownership interest in a property if you have a legal interest in the property. This means that if you sell a property, your ownership interest continues until the date of settlement (rather than the date the contract of sale is signed). In this case, the property was the main residence of the deceased until they passed away on 20XX. In this instance the property was not sold in the two year period due to circumstances out of the control of the executor. A circumstance arose that was not concluded until the 20XX. The property was listed for sale and was sold within eight months of this date. This falls out of the two year period by only X months and XX days. Having considered these circumstances the Commissioner is able to apply his discretion under subsection 118-195(1) of the ITAA 1997 and allow an extension of time until 20XX.

Relevant facts and circumstances: The property was the main residence of the deceased. There is one executor and the trustee of the estate. The property could not be actively marketed for sale until the XX XX 20XX due to circumstances out of the control of the executor.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 115-A | Income Tax Assessment Act 1997 section 102-20 | Income Tax Assessment Act 1997 section 118-195 | Income Tax Assessment Act 1997 section 104-10