Private ruling: Capital gains tax - deceased estate - Commissioner's discretion to extend the two year period - main residence exemption
Date of advice: 18 May 2017
Published: September 2017
Ruling period: Year ended 30 June 20ZZ.
Date scheme commenced: 1 July 20YY.

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: 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. | 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 the complexity of the deceased estate which delayed the completion of the administration of the estate. 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 20XX (the deceased) | The dwelling was the deceased's main residence when they passed away. | The dwelling has not been used to produce assessable income. | The deceased left an incomplete will which named a friend as sole beneficiary. (A) | The deceased also left a surviving child. (B) | 'B' suffered from a medical condition and their affairs were administered by an organisation (C) | 'A' engaged legal representation and 'C' attempted to obtain further information regarding the will. Unfortunately no response was provided and 'A' did not obtain probate. | 'C' was required to investigate the validity of the will and this delayed the administration of the estate. | 'B' passed away in 20YY prior to 'C' obtaining probate. | 'C' was able to obtain probate in 20YY. | The dwelling was prepared for sale and listed for sale by auction in early 20ZZ. | Settlement took place a short time later in 20ZZ.