Private ruling: The Commissioner’s discretion to extend the two year time limit to dispose of a dwelling
Date of advice: 5 June 2018
Published: August 2018
Ruling period: Year ended 30 June 201x.
Date scheme commenced: 1 July 201x.

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? | A1: Yes.


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 | Income Tax Assessment Act 1997 subsection 118-195(1)

Reasons for decision: Summary: The Commissioner will exercise his discretion under subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) and allow an extension of time. | Detailed Reasoning - Detailed reasoning: The capital gains provisions allow for concessional treatment to be given to a dwelling that was owned by a deceased person if the executors of the deceased person’s estate sell that dwelling within two years of the date of death. Any capital gain or capital loss made on the sale of such a dwelling is disregarded if the dwelling was: ● Acquired by the deceased before 20 September 1985, or ● The deceased’s main residence when they died. The Commissioner has the discretion to extend the two year period. This extension is generally only granted where the executors are merely arranging the ordinary sale of the dwelling and the cause of the delay is beyond their control (for example, if the will is challenged). There must not be any other factors mitigating against exercising it. In your case, the delay in disposing of the dwelling was due to the will of the deceased being challenged. This delay prevented you from disposing of the dwelling within the two year time limit. The Commissioner accepts that it is appropriate to grant the short extension that you have requested.

Relevant facts: The deceased acquired a dwelling (the dwelling) | The deceased passed away in 201x (the deceased) | The dwelling was the deceased’s main residence. | The dwelling remained vacant from the date of the deceased’s death. | The deceased left a number of wills which included multiple beneficiaries. | The last will of the deceased was made shortly before the deceased passed away. | A legal dispute arose between the beneficiaries in relation to the validity of the latter will. | The legal dispute was resolved by the beneficiaries entering into a deed of settlement in 201x. | The executor renounced their role a short time later in 201x. | A substituted executor was appointed in 201x. | The dwelling was prepared for sale and was listed for sale in 201x. | The dwelling sold at auction with settlement occurring in 201x.