Private ruling: Capital gains tax - Commissioner's discretion to extend the two year period to dispose of an inherited property
Date of advice: 28 July 2020
Published: August 2020
Ruling period: Income year ending 30 June 2018 | Income year ending 30 June 2019
Date scheme commenced: 1 July 2017.

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 for you to dispose of the property acquired by your parent before 1980? | A1: Yes. Having considered your circumstances and the relevant factors, the Commissioner will allow an extension of time. Further information about this discretion can be found by searching 'QC 52250' on www.ato.gov.au | Q2: Will the Commissioner exercise his discretion under subsection 118-200(3) of the ITAA 1997 and allow an extension of time to the two year period for you to dispose of the property acquired by your parent after 1985? | A2: Yes. Having considered your circumstances and the relevant factors, the Commissioner will allow an extension of time.

Relevant facts and circumstances: Your parents acquired the Property before 1980. They resided there until parent 1 transferred their share to parent 2 after 1985. Then parent 2 and the remainder of the family resided there for a few years. The Property was then rented out with occasional vacant periods, until it was sold by the executors about 30 months after parent 2's death in late 2016. Your spouse had died the year before your parent died. You had to take a court order out against your surviving parent because of their mental illness and threats against you. This made access to the property where parent 2 had been living to access their documents and possessions very difficult. When you did get access to the other property it took some time to locate and collate all the relevant documents. You had to collate and attend to about 20 years of tax and other documents. Some documents were in the possession of others including some held by a lawyer which took numerous requests and nearly 2 years to obtain. These were needed by the accountant for tax and other purposes and eventually by you to prepare the probate documents. Once you had the paperwork in order you applied for probate and it was granted in early 2019. The property was sold within 2 months of probate being granted. There are some issues from probate and the will that you are still working through concerning other assets of the estate. Your lawyer advised that the process had been complicated by the small share in another property, where parent 2 was living, which may take more time to finalise.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 102-20 | Income Tax Assessment Act 1997 Section 104-10 | Income Tax Assessment Act 1997 Section 118-195 | Income Tax Assessment Act 1997 Section 118-200