Private ruling: CGT - deceased estate
Published: September 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Question and answer | Will the Commissioner exercise his discretion to grant an extension of the two year time period to disregard any capital gain or loss you made when you sold your share of your father's property to your siblings? | No.

Relevant facts and circumstances: The deceased passed away several years ago. You were one of several beneficiaries to the deceased's estate. The estate included a house. One of the deceased's children was the executor of the will. Probate was granted approximately one year after the deceased's death. Approximately 6 months later, the process of transferring ownership of the property the beneficiaries began. The process of transferring ownership was delayed by about three months when the Lands Titles Office requested the grant of probate of the deceased's spouse's will. The estate was finalised approximately X years after the deceased's death. At this time, all beneficiaries decided that two of the beneficiaries would buy out the other beneficiaries' share in the property. The two beneficiaries buying out the other shares asked for time to sort out their finances and sell their current house before finalising this transfer. You were one of the beneficiaries who sold your share in the property. The transfer did not occur until approximately Y years after the deceased's death.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 118-195(1).

Reasons for decision: Summary: When a person inherits a deceased person's dwelling, they may be exempt or partially exempt when a capital gains tax (CGT) event happens to it (for example, they sell it). Where the dwelling is sold within two years of the deceased's death, the trustee or beneficiary can disregard the capital gain or capital loss resulting from the sale. A trustee or beneficiary of a deceased estate may apply to the Commissioner to grant an extension of the two year time period, where the CGT event happens in the 2008-09 income year or later income years. Generally, the Commissioner would exercise the discretion in situations where the delay is due to circumstances which are outside of the control of the beneficiary or trustee, for example: · the ownership of a dwelling or a 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 unforeseen 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 of sale over the dwelling is unexpectedly delayed or falls through for circumstances outside the beneficiary or trustee's control. In exercising the discretion the Commissioner will also take into account whether and to what extent the dwelling is used to produce assessable income and for how long the trustee or beneficiary held the ownership interest in the dwelling. In your case, there was no challenge to the will, the estate was not complex, there were no unforseen or serious personal circumstances that arose during the period, and the settlement of the sale contract was not delayed due to circumstances beyond the beneficiary or trustee's control. Apart from the delay where the Land Titles Office asked for the deceased's spouse's grant of probate, the delays were due to the actions of the executor and the beneficiaries. Therefore, in your case, the circumstances are as such that the Commissioner cannot exercise his discretion to extend the two year time period. Therefore, you cannot disregard any capital gain or loss you made when you sold your share of the property to the other beneficiaries.

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