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Edited version of your written advice

Authorisation Number: 1051210717944

Date of advice: 5 April 2017

Ruling

Subject: Capital gains tax - deceased estate - Commissioner's discretion to extend the two year period

Question 1

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(s):

Year ended 30 June 20YY.

The scheme commences on:

1 July 20XX.

Relevant facts

The dwelling was the main residence of the deceased.

The deceased left two Wills.

Probate was obtained in an Australian State.

Legal proceeding where commenced in the relevant Court in 20XX.

Mediation between the parties occurred in 20XX.

A contract for the sale of the dwelling was executed in 20YY.

Settlement will occur in 20YY.

The dwelling has not been used to produce assessable income.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 104-10

Income Tax Assessment Act 1997 subsection 118-130(3)

Income Tax Assessment Act 1997 section 118-195

Explanatory memorandum to the Taxation Laws Amendment Bill (No.9) of 2011 (Cth)

Reasons for decision

Summary

The Commissioner will exercise discretion under subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) by allowing an extension of time until the requested date.

Detailed reasoning

The capital gains provisions allow for concessional treatment to be given to a dwelling that was owned by a deceased person if the executors of the deceased person's estate sell that dwelling within two years of the date of death.

Any capital gain or capital loss made on the sale of such a dwelling is disregarded if the dwelling was:

The Commissioner has the discretion to extend the two year period. This extension is generally only granted where the executors are merely arranging the ordinary sale of the dwelling and the cause of the delay is beyond their control (for example, if the will is challenged). There must not be any other factors mitigating against exercising it.

The Commissioner accepts that it is appropriate to grant the short extension that you have requested.

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