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Edited version of your written advice
Authorisation Number: 1051265250441
Date of advice: 8 August 2017
Ruling
Subject: Application to extend two year capital gains exemption period
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 until DDMMYY
Answer
Yes.
Having considered your circumstances and the relevant factors, the Commissioner is able to apply his discretion under subsection 118-195(1) of the ITAA 1997 and allow an extension of time until DDMMYY. Further information on the relevant factors and inheriting a dwelling generally can be found on our website ato.gov.au and entering Quick Code QC52250 into the search bar at the top right of the page.
Main residence on land of more than 2 hectares
Section 118-120 of the ITAA 1997 provides that the main residence exemption only extends to the dwelling plus two hectares of adjacent land. Any land that exceeds two hectares will therefore be subject to capital gains tax provisions.
If the land area surrounding a dwelling that is your main residence is greater than two hectares, you may choose which particular part of the land is covered by the main residence exemption.
If the area of land you select can be separately valued, you calculate your capital gain or loss on the remainder of the land by apportioning the capital proceeds and the cost base on the basis of the valuation.
If the area of land you select cannot be separately valued, you may calculate your capital gain or loss on the remainder of the land by apportioning the capital proceeds and the cost base on an area basis.
The amount of the capital gain or capital loss attributable to the remainder of your land must be reasonable in the circumstances
This ruling applies for the following period:
Year ended 30 June 2017
The scheme commences on:
01 July 2016
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
The deceased resided at the property since purchasing the property in xxxx.
The deceased resided at this address until their death on xx xx xxxx. The property was never used for income producing purposes during the entire ownership period.
The property was never used for income producing purposes from the date of death until the sale of the property on the xx xx xxxx.
The Will named the executor of their will as their spouse who died shortly before the deceased.
Probate was granted to two of their surviving children on xx xx xxxx.
Administration of the Estate was substantially delayed due to
● Ill health and medical condition of one of the beneficiaries.
● The remaining beneficiaries were geographically dispersed which made it difficult for communication and participation in decisions of the estate.
● The state of disrepair of the property which required extensive effort over many months to vacate the property and bring it to a saleable condition.
● Difficulty in gaining access to documents to prove title to allow the land converted to the Torrens title system and be registered for sale.
The property has been sold and settlement occurred on xx xxxx xx
Relevant legislative provisions
Income Tax Assessment Act 1997 s118-120
Income Tax Assessment Act 1997 s118-195.
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