Private ruling: Capital gains tax - deceased estate - Commissioner's discretion to extend the two year period
Date of advice: 22 December 2016
Published: June 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 a specific date? | A1: Yes.

Relevant facts and circumstances: Your parent passed away in 20WW In early 20XX you and your sibling inherited your parent's residence. You were unaware of the two year period for the sale of the dwelling. The dwelling was built about 60 years ago. Clearing the house took longer than expected as your deceased parent had accumulated a lot of things over the years. One of you is wheelchair bound. One of you developed an illness making it difficult to attend the property. One of you also held a strong emotional attachment to the dwelling, and lost further family members during this period. The task of clearing out the house was often put on hold for months at a time. The dwelling was sold in early 20ZZ. The dwelling was never rented out.

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 the requested period. | 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 you both being unable to attend to the deceased estate due to serious personal circumstances arising during the two year period. The Commissioner accepts that it is appropriate to grant the short extension that you have requested.