Private ruling: Commissioner's discretion
Date of advice: 8 March 2016
Published: May 2016
Ruling period: Year ended 30 June 2016
Date scheme commenced: 1 July 2015

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 until 31 December 2016? | A1: Yes.

Relevant facts and circumstances: The sole asset from the deceased estate is a dwelling. The deceased purchased the home before 1985. The property has never been income producing. One of the beneficiaries was overseas. They also reside in another city and has had, few opportunities to visit the house to decide which household items they wish to have. Another beneficiary has been unable to attend to the deceased estate due to serious personal circumstances arising during the two-year period. They are currently undergoing treatment and are improving. Whilst the will is not being challenged, the complexity of clearing and cleaning the property and sharing the family items is and has delayed disposal.

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

Reasons for decision: Summary: Subsection 118-195(1) of the ITAA 1997 states that if you are an individual who owns a dwelling in a capacity as trustee of a deceased 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 on or after 20 September 1985 and the property 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; or the property was acquired by the deceased before 20 September 1985; and • your ownership interest ends within 2 years of the deceased's death (the Commissioner has discretion to extend this period in certain circumstances). The Commissioner can exercise his discretion in situations such as where: • 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 Due to the ill health of a beneficiary the property was unable to be sold within two years of the deceased's death. Having considered the relevant facts, the Commissioner is able to apply his discretion under subsection 118-195(1) of the ITAA 1997 and allow an extension to the 2 year time limit.