Private ruling: Capital gains tax deceased estate main residence exemption
Date of advice: 16 November 2016
Published: January 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 until settlement? | 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: 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 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 Commissioner accepts that it is appropriate to grant the short extension that you have requested.

Relevant facts: The deceased acquired a dwelling (the dwelling) | The deceased passed away in 2014 (the deceased) | The dwelling was the deceased’s main residence. | The title deeds to the dwelling were unable to be located in the deceased’s personal affairs and as a result it was determined that duplicates would need to be obtained. | The title to the dwelling was held in shares. | This caused delays in transferring title to the dwelling to you. | The dwelling was used to produce assessable income for a period of your ownership. | The dwelling was recently placed on the market and settlement occurred after a period of time.