Private ruling: Capital gains tax
Date of advice: 4 August 2022
Published: November 2022
Ruling period: Year ended 30 June 2022
Date scheme commenced: 1 July 2021

Ruling: Q1: Will the Commissioner exercise his discretion under section 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the two-year period to dispose of the 50% ownership interest in the dwelling up to 2 hectares in size? | A1: Yes. Having considered your circumstances and the relevant factors, the Commissioner will extend the two-year period to dispose of the 50% ownership interest up to 2hectares in the dwelling. The portion of the property over 2 hectares of the property will be subject to the CGT provisions.

Relevant facts and circumstances: The deceased passed away over a decade ago. The deceased acquired the property as joint tenant with Person Z over two decades ago. This was vacant land when acquired. The property was over 2 hectares in size. A main residence was built on the land in around a few years after the purchase of the land and a granny flat was built on the land in the following year. A couple of years later, ownership was changed to tenants in common 50% each. The deceased's will gave Person Z the right to reside in the property as long as they wished, with the deceased's share of the property passing to the deceased's children once this right ended. Person Z died on 4 July 2021, ending their right to reside in the property. The property was listed for sale a few months later. Sale contract for the property was signed a few months ago and settled a couple of months later. The property was never used to produce income. The reason for the property not selling within the 2 year period was due to the spouse having the right to reside in the property.

Relevant legislative provisions: Income Tax assessment Act 1997 section 118-195