Private ruling: Capital gains tax – deceased estate – Commissioner’s discretion
Date of advice: 8 November 2017
Published: March 2018
Ruling period: Year ended 30 June 2017.
Date scheme commenced: 1 July 2016.

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. The delay in disposing of the dwelling was due to you being unaware that the deceased had passed away and that you were a potential beneficiary. These circumstances prevented you from being able to attend to the deceased estate during the two year period. The Commissioner accepts that it is appropriate to grant the extension that you have requested.

Relevant facts: The deceased was a relative who you had not had contact with for many years. | The deceased acquired a dwelling (the dwelling). | The deceased passed away in 2010 (the deceased). | The dwelling was the deceased’s main residence. | The deceased resided in a nursing home prior to death. | The dwelling was not used to produce assessable income. | By chance, you visited the area that your relative had lived in around 2016. At the time you were not aware that your relative had passed away. You initiated discussions with your relative’s neighbours, who told you that your relative had passed away and that they had died intestate. | You obtained access to the property and searched for any personal documents in relation to a will. These proved unsuccessful. | The dwelling was occupied by a relative (‘A’) who is a relative of the deceased’s spouse, (‘B’). | ‘B’ passed away prior to the deceased. | You determined that you were the only beneficiary of the deceased’s estate. | You obtained letters of administration in 2016. | Title to the property was transferred to you personally as beneficiary of the deceased’s estate. | The property was listed for sale and settlement took place a short time later in 2016.