Private ruling: Capital gains tax - deceased estate - Commissioner's discretion to extend the two-year period - main residence exemption
Published: May 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1:  | A1: 

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 the trustee of a deceased estate. The deceased died approximately two years ago. The deceased owned a dwelling which was their main residence. The dwelling has not been used to produce assessable income. There has been a delay in the disposal of the dwelling which has been outside the control of you and beneficiaries of the estate, for the following reasons: · the disposal of the dwelling is not a normal residential sale and the timeliness of the negotiations are largely beyond your control · a company has offered to purchase the property and negotiations commenced almost 12 months ago · a valuation of the property was undertaken by a licensed valuer in accordance with the mining company's policy · negotiations are taking place as to an agreed price for the sale of the dwelling · being an individual it is difficult for you to place pressure on the company to speed up the negotiation process · the time at which these negotiations will be completed is at this stage unknown as the time the mining company takes is beyond your control. It is likely that the negotiations will extend beyond the two year period contained in section 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997), and · in addition, there is a third party company who is valuing that complicates matters further.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 104-10 | Income Tax Assessment Act 1997 Section 118-195 | Income Tax Assessment Act 1997 Section 118-200

Reasons for decision: Summary: While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision. Due to recent changed to section 118-195 of the ITTA 1997, the Commissioner now has discretion to extend the two-year period in the Act where: · the ownership of a dwelling or 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 of a contract for sale over the dwelling is unexpectedly delayed or falls through or circumstances outside the beneficiary or trustee's control. In your situation, you have been negotiating with a company in relation to them purchasing the dwelling for a considerable time, and as yet an agreed price has not been reached. You have indicated that you are unsure as to when the mining company will advise you of their decision. We acknowledge that the mining company may have prolonged the sale process but based on the information provided, we believe that sufficient time has been allowed from when the mining company indicated their intention to purchase the dwelling to reach a settlement price. For this reason the settlement for the sale of the dwelling does not fall into the category of unexpected delay. Therefore, you do not meet the criteria in which the Commissioner may exercise his discretion to extend the two-year period in which a deceased's main residence must be sold. The normal capital gains tax (CGT) rules apply to the disposal of the dwelling. CGT The most common CGT event CGT event A1 occurs when you dispose of an asset to another entity. The time of the event is when you enter into the contract for disposal of it, or if there is no contract when the change of ownership occurs. | Detailed Reasoning - Deceased estate - main residence: Special rules apply of the asset was the deceased person's main residence. If you inherit a deceased person's dwelling, you may be exempt or partially exempt when a CGT event occurs to it. For more information on how CGT applies please see the enclosed information. This information has been taken from the Guide to capital gains tax 2011-12 (NAT 4151). Information is also available on our website - www.ato.gov.au. The rulings in the register have been edited and may not contain all the factual details relevant to each decision. Do not use the register to predict ATO policy or decisions.

Subject: Capital gains tax - deceased estate - Commissioner's discretion to extend the two-year period - main residence exemption: Question : Will the Commissioner exercise his discretion under section 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997) in your particular circumstance?