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This edited version has been archived due to the length of time since original publication.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.

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Edited version of your written advice

Authorisation Number: 1012993021759

Date of advice: 8 April 2016

Ruling

Subject: Request for Commissioner's discretion

Question

Will the Commissioner exercise the discretion provided under section 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the two-year main residence exemption period until the settlement date of the property?

Answer

Yes.

This ruling applies for the following periods:

Year ending 30 June 2016

The scheme commences on:

1 July 2015.

Relevant facts and circumstances

The deceased passed away in 20XX.

You subsequently inherited an ownership interest in property as a beneficiary of the deceased estate.

You had intended on selling the property in 20YY, however a family member was then diagnosed with a serious illness.

As a result, all matters pertaining to the estate were place on hold.

The property was sold with settlement occurring in the relevant year.

The property remained unoccupied from the date of the deceased's death until the settlement date.

Relevant legislative provisions

Income Tax Assessment Act 1997 - Section 118-195

Reasons for decision

Subsection 118-195(1) of the ITAA 1997 states that if you own a dwelling in your capacity as trustee of a deceased estate (or it passed to you as a beneficiary of an estate), then you are exempt from capital gains tax on the disposal of the property if:

You have an ownership interest in a property if you have a legal interest in the property. This means that if you sell a property, your ownership interest continues until the date of settlement (rather than the date the contract of sale is signed).

In this case, the property was purchased by the deceased prior to September 1985. The deceased therefore held the property as a pre-CGT asset immediately before their death. The property was the deceased's main residence until they passed away. The property was not sold within two years of their passing. You will only be able to disregard the capital gain from the sale of the post CGT interest of the property if the Commissioner extends the two year time period.

The Commissioner can exercise his discretion in situations such as where:

Having considered the circumstances and the factors outlined above, the Commissioner is able to apply his discretion under subsection 118-195(1) of the ITAA 1997 and allow an extension of time until the settlement date of the property.


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