Private ruling: Capital gains tax - deceased estate - Commissioner's discretion to extend the two-year period - main residence exemption
Published: September 2013
Ruling period: To a specified date in 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Would the Commissioner exercise his discretion under section 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997) in your particular circumstance? | A1: Yes. Extension granted to a specified date.

Relevant facts and circumstances: Your parent (parent A) owned a property which your parents established as their main residence. Less than ten years ago your child died suddenly. As a result of your child's death your other child now suffers from a medical condition which requires specialist treatment. The death of your child has also affected your spouse and they now suffer from a medical condition. More than two years ago your parent B passed away. Shortly after your parent A moved into an aged care facility. The property was your parent A's main residence for their entire ownership period. Shortly after moving into the aged care facility your parent A died. You have inherited the property under your parent A's will. You currently suffer and have suffered from a number of medical conditions for approximately eight years which has hindered your ability to dispose of the property. You are currently seeing a specialist for your on-going medical conditions. Mid this year you put the property on the property market with a real estate agent. Approximately a week later you accepted an offer subject to the purchaser obtaining finance. The property was due to settle the following month but the purchaser was having problems obtaining a loan. Just prior to settlement date your real estate agent advised you that the purchaser was unable to secure finance due to property settlement with their ex-spouse. The purchaser also advised that he should know if he is able to get finance within the next two weeks. Recently the purchaser contacted you to advise that they could not provide you with a realistic timeframe as to when they could obtain the finance to purchase the property. The finance condition of the Offer and Acceptance was not satisfied in the extended time granted and as such, the contract has been terminated. You have engaged a new real estate agent to dispose of the property. Your new real estate agent photographed the property and it was placed on the internet with an open house occurring in the near future. Your spouse is currently in hospital due to stress caused by the contract being terminated on the disposal of the property. The property has never been used to produce assessable income. You will dispose of the property within six months.


Reasons for decision: Summary: While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision. Due to recent changed to section 118-195 of the ITAA 1997, the Commissioner now has discretion to extend the two-year period in the Act where: · the ownership of a dwelling or 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 unforseen 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 for sale over the dwelling is unexpectedly delayed or falls through or circumstances outside the beneficiary or trustee's control. In your case, you have not been able to dispose of the property due to the Offer and Acceptance agreement was not satisfied in the extended time granted and as such, the contract has been terminated. Accordingly, you meet the criteria in which the Commissioner may exercise his discretion to extend the two-year period in which a deceased's main residence must be disposed of. The Commissioner considers that it is appropriate to exercise his discretion on this occasion and allow up until a specified date to dispose of the property.