Private ruling: CGT - deceased estate
Published: July 2013
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Question and answer: | Will the Commissioner exercise his discretion to allow an extension of the two year time period to disregard any capital gain or loss made on the sale of the dwelling of the deceased? | Yes.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are a beneficiary of the will of a relative. The will of the deceased named multiple beneficiaries. You were one of the beneficiaries of this will. The beneficiaries of the will are to receive equal parts of the proceeds of the sale of the estate. The estate comprised of a dwelling which was the main residence of the deceased. It was intended that the dwelling be immediately sold. Listing of the dwelling for sale was delayed due to the trustee requiring details of the doctor who was attending the deceased at the time they wrote their will. Listing of the dwelling for sale was also delayed due to the beneficiaries of the estate having difficulties coming to an agreement in regards to the sale price for the property. A contract for sale of the dwelling was not achieved within two years of the date of death of the deceased. Settlement occurred more than two years after the date of death of the deceased. The dwelling was never used for income producing purposes.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-195

Reasons for decision: Summary: Where you inherit the dwelling of a deceased person you may be exempt from any capital gain you make when you sell the property. Section 118-195 of the Income Tax Assessment Act 1997 provides that where the dwelling is sold within two years of the deceased's death, the trustee or beneficiary can disregard the capital gain or capital loss resulting from the sale. Where the sale of the property is delayed, the trustee or beneficiary of the deceased estate may apply to the Commissioner to grant an extension of the two year time period under the Act. Generally, the Commissioner would exercise the discretion in situations where the delay is due to circumstances which are outside of the control of the trustee or beneficiary, for example: · 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 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 or a contract of sale over the dwelling is unexpectedly delayed or falls through for circumstances outside the beneficiary or trustee's control. In your situation, you were unable to dispose of the deceased's dwelling within two years of the deceased's death due to the trustee requiring details of the doctor who was attending the deceased prior to their death as well as being unable to reach an agreement with the other beneficiaries about a sale price for the property. These factors were outside your control. Therefore, the Commissioner will exercise his discretion to extend the two year period in which a deceased's main residence must be disposed of. You are entitled to disregard the capital gain or capital loss which resulted from the sale of the dwelling.