Private ruling: Capital Gains Tax – deceased estate – extension of time
Date of advice: 22 September 2020
Published: February 2018
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 Having considered your circumstances and the relevant factors, the Commissioner is able to apply his discretion under subsection 118-195(1) of the ITAA 1997, and allow an extension of time. Further information on the relevant factors and inheriting a dwelling generally can be found on our website ato.gov.au and entering Quick Code QC52250 into the search bar at the top right of the page.

Relevant facts and circumstances: The deceased passed away in 20xx. The deceased owned a property (the dwelling) which was the deceased’s main residence and was not used to produce assessable income. The estate also included an extensive amount of assets comprising of properties, shareholdings, terms deposits, bank accounts, farming operations and personal chattels. There were X named beneficiaries in the deceased’s Will, Y beneficiaries being family members of the deceased and Z being the spouse of one of the family members. One of the beneficiaries predeceased the deceased and as a result their share of assets fell into residue. The Will was challenged as a result of the assets falling into residue. This occurrence caused delays in the completion of administration of the estate. The grant of probate was delayed due to concerns regarding the drafting of the will by the solicitor. Legal advice was obtained to proceed with an application to rectify the Will and Relevant Court proceedings were instigated in 20xx. The court ordered mediation and terms of settlement were reached. Due to an error in the terms of settlement a deed of rectification was signed and probate of the deceased’s will was granted on the same date. Due to the complexity of the estate, the realisation of various assets had to be prioritised. A beneficiary raised concerns regarding the administration of the estate, this resulted in a further delay and a substantial amount of evidence was required to be provided to the court. A Heads of Agreement was signed by all parties to resolve the dispute. There were further court proceedings and a special referee was appointed to resolve the dispute. This dispute was finalised in 20xx. The dwelling was sold at auction and settlement occurred in 20xx.

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