Private ruling: Capital gains tax – deceased estate – Commissioner’s discretion to extend the two year period to dispose of an inherited dwelling.
Date of advice: 14 March 2019
Published: May 2019
Ruling period: Year ending 30 June 2019
Date scheme commenced: 1 July 2018

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? | A1: Yes. Having considered your circumstances and the relevant factors, the Commissioner will allow an extension of time. Further information about this discretion can be found by searching 'QC 52250' on ato.gov.au

Relevant facts and circumstances: The deceased acquired a property (the dwelling). The deceased passed away. The dwelling was the deceased’s main residence at the time of death. Probate for the deceased’s will was granted six months after the deceased’s death. The deceased’s will, appointed two of the deceased’s children as executors. The will gave one child a right to reside in the dwelling until it was sold. The dwelling was not used to produce assessable income. The deceased’s will left the dwelling to her children, A, B C & D. The executors agreed for A and B to buy C and D’s share in the dwelling. In order to buy C and D’s share of the dwelling, B put their house (B’s Property) on the market. The property downturn impacted the sale and B’s Property was passed in at auction without any bids. Some improvements were made to B’s Property (including painting and new carpet) and it was put on the market again. B’s Property was passed in at auction again. B received an offer. Settlement for B’s Property occurred 2 years and 5 days after the deceased’s death. A contract of sale for the deceased’s dwelling was entered into with settlement occurring with the funds from the settlement from B’s Property.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 subsection 118-130(3) | Income Tax Assessment Act 1997 section 118-195