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This edited version has been archived due to the length of time since original publication.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: 1013004080763

Date of advice: 28 April 2016

Ruling

Subject: Deceased estate

Question

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?

Answer

Yes.

This ruling applies for the following period:

Year ending 30 June 2015

The scheme commences on:

1 July 2014

Relevant facts and circumstances

The deceased passed away.

The property was the deceased's main residence at the time of their death.

The property was never used to produce assessable income.

You and your sibling disputed the will for some time.

Probate was granted on dd/mm/yyyy.

You and your sibling continued to have issues over the estate. The matter was finally settled at mediation.

The property was listed for sale the same month and settled within a couple of months.

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 are an individual who owns a dwelling in a capacity as trustee of a deceased estate, then you are exempt from tax on any capital gain made on the disposal of the property if:

In your case, the property has not been sold within the two year time limit. Therefore, you will only be able to disregard the capital gain from the sale of the property if the Commissioner grants an extension to the two year time limit.

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

In your case, the delay in the disposal of the property was due to disputes over the will causing delays in receiving probate and in finalising the estate. The property was subsequently sold within a few months.

Having considered the relevant facts, the Commissioner is able to apply his discretion under subsection 118-195(1) of the ITAA 1997 and allow an extension to the two year time limit. Accordingly, you will be entitled to disregard the capital gain on the sale of the property.


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