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This edited version has been archived due to the length of time since original publication.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: 1051182063662

Date of advice: 18 January 2017

Ruling

Subject: Capital gains tax

Question 1

Will the Commissioner exercise discretion under Section 118-195 of the Income Tax Assessment Act 1997 and allow an extension of time to the two year period until DDMMYY?

Answer

Yes.

This ruling applies for the following periods:

Year ending 30 June 201X

The scheme commences on:

1 July 201Y

Relevant facts and circumstances

The deceased died in 20XX.

The deceased purchased the property pre-CGT.

The property was the deceased's main residence for the entire ownership period.

There were multiple legal disputes relating to the complexities of the estate which delayed the administration of the estate. While these disputes were on-going, one of the beneficiaries died, further complicating the administration of the estate.

The property has not been used to produce assessable income.

The property will be transferred out of the estate by DDMMYY.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195

Income Tax Assessment Act 1997 subsection 118-195(1)

Reasons for decision

Subsection 118-195(1) of the Income Tax Assessment Act 1997 (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 tax on any capital gain made 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).

You will only be able to disregard the capital gain from the sale of the property if the Commissioner extends the 2 year time period.

The Commissioner can exercise discretion in situations such as where:

Application to your circumstances

In this case, due to the complexities of the estate, legal disputes between the beneficiaries and the death of a beneficiary, the administration of the estate was delayed.

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 until DDMMYY.

As a result of extending the two year time limit, you will satisfy all of the conditions contained in section 118-195 of the ITAA 1997. You can disregard any capital gain or loss that arises as a result of the disposal of the property.


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