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Edited version of your written advice

Authorisation Number: 1051339543780

Date of advice: 16 February 2018

Ruling

Subject: Capital gains tax – deceased estate – Commissioner’s discretion

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?

Answer

Yes.

This ruling applies for the following period

Year ended 30 June 2018.

The scheme commences on

1 July 2017.

Relevant facts

The deceased acquired a dwelling (the dwelling).

The deceased passed away in 2016.

The dwelling was the deceased’s main residence.

The deceased’s Will included a right to reside in the dwelling for a period of time to the deceased’s child (‘A’)

The executors have placed the dwelling on the market and accepted an offer to purchase the dwelling with settlement occurring a short period after the two years after the deceased passed away.

‘A’ has continued to reside in the dwelling.

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

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

Reasons for decision

Summary

The Commissioner will exercise his discretion under subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) and allow an extension of time.

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.

In this case, the dwelling was occupied by ‘A’ who had a right to do so under the Will of the deceased.

Settlement on the disposal of the dwelling will occur a short period after the end of the two year period after the deceased passed away.

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

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