Private ruling: CGT - deceased estate - main residence
Published: August 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Will the Commissioner exercise his discretion to extend the time period in subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) where the trustee or beneficiary of a deceased estate's ownership interest ends after two years from the deceased's death? | A1: Yes

Relevant facts and circumstances: The deceased inherited their main residence after 20 September 1985. The property was always used as the deceased's main residence. The deceased passed away during the 2010-11 financial year. Upon their death, the deceased had several outstanding matters which took significant time to settle. The main residence of the deceased could not be disposed of until these matters had been dealt with. The settlement of the sale of the property occurred during the relevant financial year, and was more than two years after the death of the deceased.

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

Reasons for decision: Summary: Subsection 118-195(1) of the ITAA 1997 allows a trustee of a deceased estate to disregard a capital gain or loss from a dwelling that a deceased person acquired after 20 September 1985 if: - the dwelling 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; and - your ownership interest ends within 2 years of the deceased's death, or within a longer period allowed by the Commissioner. In your case, the dwelling was the deceased's main residence just before their death, and was not being used to produce assessable income. Although the trustee's ownership interest in the dwelling ended more than two years after the date of the deceased's death, in view of your particular circumstances the Commissioner will exercise his discretion to extend the two year exemption period to the time at which settlement occurred on the sale of the deceased's main residence. The sale of the property will therefore not be subject to CGT.