Private ruling: Capital gains tax - deceased estate - Commissioner's
Published: June 2013
Ruling period: 30 June 2014
Date scheme commenced: 1 July 2012

Ruling: Q1: Will the Commissioner exercise his discretion under section 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997) in your particular circumstance? | A1: Yes .

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 executor and a beneficiary of the estate of the deceased. The deceased owned and resided in a dwelling as their main residence. The deceased died approximately two years ago. The proceeds from the dwelling will be divided equally between the deceased's children. The dwelling according to the relevant department valuation is worth $X. Early this year the dwelling was listed with a real estate agent for offers of specified price range in hope of a quick sale. A number of months ago an offer of $X was received but after extended negotiations the prospective purchaser withdrew the offer, claiming there were structural problems resulting from ground settlement. Settlement of a contract of sale over the property fell through due to circumstances outside your control. You organised a building inspection on the dwelling which uncovered structural damage that must be rectified before it can be re-listed for sale. The time required to call for rectification quotes, accept a quote and carry out the work will extend beyond the two-year tax free period. The dwelling has and will remain vacant and not income producing until its disposal. The dwelling will be disposed of by a specified date. You have supplied a copy of the following documentation to support your application and this documentation is to be read with and forms part of your application for the purpose of this ruling: · property inspection report, and · marketing history report.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 118-195.

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 case, you have not been able to dispose of the dwelling due to the contract of sale falling through because of structural damage and the subsequent repairs that must be undertaken before you can re-list it for sale. Accordingly, you 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 disposed of. The Commissioner considers that it is appropriate to exercise his discretion on this occasion and allow up until a specified date to dispose of the dwelling.