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This edited version has been archived due to the length of time since original publication.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: 1051203571230

Date of advice: 5 April 2017

Ruling

Subject: Capital gains tax and deceased estate - 2 year extension

Question 1

Will the Commissioner exercise his discretion under subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) in relation to the dwelling and allow an extension of time until late 20XX?

Answer

Yes

This ruling applies for the following period:

Year ending 30 June 2017

The scheme commences on:

1 July 2016

Relevant facts and circumstances

The deceased died in 20XX.

The deceased acquired the property before 20 September 1985.

There were two Wills.

The executor had to seek professional opinion of the possible incapacity of the deceased at the time of making the final Will.

The property has been vacant since the deceased's date of death.

A Deed of Agreement was completed in early 20XX.

Probate was granted on mid 20XX.

Settlement occurred late 20XX.

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 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).

In this case, the property was purchased by the deceased before 20 September 1985 and the property was not sold within 2 years of the deceased's date of death.

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 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 late 20XX.


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