Private ruling: Capital gains tax – deceased estate – Commissioner’s discretion to extend the two year period
Date of advice: 30 August 2017
Published: December 2017
Ruling period: Year ended 30 June 2018.
Date scheme commenced: 24 December 2013.

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.

Relevant facts and circumstances: The deceased owned dwelling that was acquired before 20 September 1985. At the time of their death, the dwelling was the deceased’s main residence. The primary executor had been unable to attend to the administration of the Estate due to the sudden passing of their spouse. There were complexities in the administration and in the retrieval of the deceased’s will. The Commissioner previously granted an extension of time to dispose of the dwelling. The executor progressed in the administration of the Estate after further difficulties in obtaining beneficiary consent were experienced for an application for the grant of Probate. The application was eventually lodged after some delay. The property has never been used to produce income. The property was sold and settled more than two years after their death.

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: 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 until the sale settlement date. 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. The delay in disposing of the dwelling was caused in part due to difficult personal circumstances experienced by the executor as well as complexities of the deceased’s estate. The Commissioner accepts that it is appropriate to grant the short extension that you have requested.