Private ruling: CGT- deceased estate
Date of advice: 25 January 2017
Published: July 2017
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 to the two year period? | A1: Yes.

Relevant facts and circumstances: The deceased died intestate and was survived by their children. A solicitor was engaged and an application was lodged in the courts to appoint an administrator. The surviving children will receive equal share of the deceased's estate. The deceased owned two properties, an investment property and their main residence. The properties were transferred to the administrator to hold on trust. The main residence was purchased in the 19XX's. The deceased treated this property as their main residence up until the time of their death. A sale contract was entered into and there were complications with the finalisation of the contact. A solicitor was engaged, and numerous attempts were made to contact the purchaser without success. The solicitor started preparing documentation for the commencement of court action. The issue was never resolved and the original sale contact was cancelled. Shortly thereafter a new contract was entered into and property was sold.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 118-195(1)

Reasons for decision: Summary: Subsection 118-195(1) of the ITAA 1997 allows a trustee of a deceased estate to disregard a capital gain or loss from a dwelling if: ● the property was acquired by the deceased before 20 September 1985 and ● your ownership interest ends within 2 years of the deceased's death (the Commissioner has discretion to extend this period in certain circumstances). The following is a non-exhaustive list of situations in which the Commissioner would be expected to exercise the discretion: ● 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 unforeseen or serious personal circumstances arising during the two year period (eg the taxpayer or a family member has a severe illness or injury), or ● settlement of a contract of sale over the dwelling is unexpectedly delayed or falls through for reasons outside the beneficiary or trustee's control. Having considered the particular circumstances of this case, the Commissioner will apply his discretion under subsection 118-195(1) of the ITAA 1997 and allow an extension to the two year time limit.