| Disclaimer This edited version has been archived due to the length of time since original publication.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. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your written advice
Authorisation Number: 1051322601217
Date of advice: 11 January 2018
Ruling
Subject: Capital gains tax
Question
Will the Commissioner exercise the discretion under subsection 118-195(1) of the Income Tax Assessment Act 1997, (ITAA 1997) on the disposal of a different asset?
Answer
No
This ruling applies for the following period:
30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
Your relative purchased a dwelling (property) before XX/XX/XXXX.
This dwelling was their main residence and they lived in this dwelling for as long as possible.
Your relative became ill in 20XX and an agent was appointed to manage the assets and affairs of your relative.
In 20XX your relative was placed in a nursing home.
In 20XX a court order was made giving instructions, relating to the interests and the administration of their estate.
In 20XX the agent made the decision to sell the dwelling due to the upkeep of this property. The funds from this disposal were not set aside or placed into a separate account, but were used to purchase different assets.
Your relative passed away in 20XX.
You and numerous others were named as beneficiaries.
In your relatives will, the property was specifically bequeathed to you and one other beneficiary.
Probate was granted in 20XX.
You received your final distribution in 20XX.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 104-10
Income Tax Assessment Act 1997 section 118-195
Reasons for decision
Summary
Commissioner is unable exercise his discretion to extend the 2 year time limit.
Detailed reasoning
Basic main residence exemption
A capital gain or capital loss made from a CGT event that happens to a CGT asset
that is a dwelling or a taxpayer’s ownership in it is disregarded if:
● the taxpayer is an individual
● the dwelling was the taxpayer’s main residence throughout their ownership
● period, and
● The interest did not pass to the taxpayer as beneficiary in or was not acquired by the taxpayer as trustee of a deceased estate.
● The basic main exemption requirements are contained in section 118-110 of the ITAA 1997.
A capital gain or capital loss may only be partially disregarded if the dwelling was:
● not the taxpayer’s main residence throughout their ownership period, or
● used for the purpose of producing assessable income.
Any capital gain or loss that arises subsequently may be disregarded if section 118-195 of the ITAA 1997 is satisfied.
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:
● the property was acquired by the deceased before 20 September 1985, or
● the property was acquired by the deceased on or after 20 September 1985 and the dwelling was the deceased’s main residence just before the deceased’s death and was not then being used for the purpose of producing assessable income, and
● your ownership interest ends within 2 years of the deceased’s death (the Commissioner has discretion to extend this period in certain circumstances).
Application to your circumstances
In your case, the property was disposed of and the proceeds from this sale were invested into a number of different assets. Any capital gain or capital loss made from the disposal of this dwelling would have been disregarded at the time this event occurred.
The main residence exemption does not apply to this type of asset and we do not need to consider the application of the Commissioner’s discretion under section 118-195 of the ITAA 1997 to extend the two year time limit.
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
