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Edited version of your private ruling
Authorisation Number: 1012526530938
Ruling
Subject: Capital gains tax - deceased estate - extension of two year period - disposal
Question:
Would the Commissioner exercise the discretion in section 118-195 of the Income Tax Assessment Act 1997 in your particular circumstances?
Answer:
Yes.
This ruling applies for the following period:
Year ended 30 June 2013
The scheme commenced on:
1 July 2012
Relevant facts:
Your parent passed away after 20 September 1985 and you were named as their executor.
The deceased made a number of wills during their lifetime.
A short time after the deceased's death, you applied for a grant of probate.
The application for probate was challenged by your siblings as they alleged that your parent lacked capacity when making his last will.
You and your siblings engaged legal representatives to resolve the issues in dispute.
During this period the property was unable to be sold.
The Supreme Court in the deceased's state issued a grant of probate in relation to an earlier will of the deceased.
You have been unable to dispose of the property within two years as the will of the deceased was challenged.
The property has not been used to produce income.
The property was sold in the relevant financial year.
The sale of the property has resulted in a capital gain.
Relevant legislative provisions:
Income Tax Assessment Act 1997 Section 104-10
Income Tax Assessment Act 1997 Section 118-195
Reasons for decision:
Due to recent changes to the Income Tax Assessment Act 1997 (ITAA), the Commissioner now has discretion to extend the two year period in the Act where:
· 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.
These examples are not exhaustive.
In this case, you were unable to dispose of the property within two years of the deceased's death due to the will of the deceased being challenged. Accordingly, you meet the above criteria the Commissioner will exercise his discretion to extend the two year period until the settlement of the contract for the sale of the property.
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