| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your private ruling
Authorisation Number: 1012301672948
This edited version of your ruling will be published in the public register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.
Ruling
Subject: CGT - deceased estate
Question and answer
Will the Commissioner exercise his discretion to grant an extension of the two year time period to disregard any capital gain or loss you made when you sold your share of your father's property to your siblings?
No.
This ruling applies for the following periods:
Year ended 30 June 2012
The scheme commenced on:
1 July 2011
Relevant facts and circumstances
The deceased passed away several years ago.
You were one of several beneficiaries to the deceased's estate.
The estate included a house.
One of the deceased's children was the executor of the will.
Probate was granted approximately one year after the deceased's death.
Approximately 6 months later, the process of transferring ownership of the property the beneficiaries began.
The process of transferring ownership was delayed by about three months when the Lands Titles Office requested the grant of probate of the deceased's spouse's will.
The estate was finalised approximately X years after the deceased's death.
At this time, all beneficiaries decided that two of the beneficiaries would buy out the other beneficiaries' share in the property.
The two beneficiaries buying out the other shares asked for time to sort out their finances and sell their current house before finalising this transfer.
You were one of the beneficiaries who sold your share in the property.
The transfer did not occur until approximately Y years after the deceased's death.
Relevant legislative provisions:
Income Tax Assessment Act 1997 Subsection 118-195(1).
Reasons for decision
When a person inherits a deceased person's dwelling, they may be exempt or partially exempt when a capital gains tax (CGT) event happens to it (for example, they sell it).
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.
A trustee or beneficiary of a deceased estate may apply to the Commissioner to grant an extension of the two year time period, where the CGT event happens in the 2008-09 income year or later income years. Generally, the Commissioner would exercise the discretion in situations where the delay is due to circumstances which are outside of the control of the beneficiary or trustee, 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 unforeseen 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 of sale over the dwelling is unexpectedly delayed or falls through for circumstances outside the beneficiary or trustee's control.
In exercising the discretion the Commissioner will also take into account whether and to what extent the dwelling is used to produce assessable income and for how long the trustee or beneficiary held the ownership interest in the dwelling.
In your case, there was no challenge to the will, the estate was not complex, there were no unforseen or serious personal circumstances that arose during the period, and the settlement of the sale contract was not delayed due to circumstances beyond the beneficiary or trustee's control.
Apart from the delay where the Land Titles Office asked for the deceased's spouse's grant of probate, the delays were due to the actions of the executor and the beneficiaries.
Therefore, in your case, the circumstances are as such that the Commissioner cannot exercise his discretion to extend the two year time period.
Therefore, you cannot disregard any capital gain or loss you made when you sold your share of the property to the other beneficiaries.
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
