Private ruling: CGT - deceased estate
Published: August 2013
Ruling period: Year ending 30 June 2014
Date scheme commenced: 30 June 2013

Ruling: Question and answer: | Will the Commissioner exercise his discretion to allow an extension of the two year time period to disregard any capital gain or loss made on the sale of the dwelling of the deceased until 30 June 2014? | 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. The deceased passed away in 20XX. The estate comprised of a dwelling (the property) which was the main residence of the deceased. You are the executrix of the estate. The property was subject to court proceedings. Listing of the property for sale was delayed due to the court proceedings. The property was not used for income producing purposes. A contract for the sale of the property was not achieved within two years of the date of death of the deceased. The executrix was granted probate in 20YY. In 20ZZ the executrix became the registered proprietor of the property. A new title deed was issued in 20AA and the property was put on the market in later in 20AA. You intend to have the property sold by 30 June 2014.

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

Reasons for decision: Summary: Where you inherit the dwelling of a deceased person you may be exempt from any capital gain you make when you sell the property. Section 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where the dwelling is sold within two years of the deceased's death, the trustee or beneficiary can disregard the capital gain or capital loss resulting from the sale. Where the sale of the property is delayed, the trustee or beneficiary of the deceased estate may apply to the Commissioner to grant an extension of the two year time period under the ITAA 1997. Generally, the Commissioner would exercise the discretion in situations where the delay is due to circumstances which are outside of the control of the trustee or beneficiary, for example: · 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 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 or a contract of sale over the dwelling is unexpectedly delayed or falls through for circumstances outside the beneficiary or trustee's control. In your situation, you were unable to dispose of the deceased's property within two years of the deceased's death due to the property being subject to legal proceedings. This factor was outside your control. Furthermore it is against the law to sell the property whilst subject to legal proceedings without the new title deed document. A new title deed document was issued in 20AA. You have taken active steps to sell the property since the legal proceedings were finalised. Therefore, the Commissioner will exercise the discretion to extend the two year period in which the deceased's property must be disposed of until settlement date, provided that settlement occurs prior to 30 June 2014. You are entitled to disregard the capital gain or capital loss which will result from the sale of the property.