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Edited version of private advice
Authorisation Number: 1051522986844
Date of advice: 29 May 2019
Ruling
Subject: Capital gains tax - deceased estate - extension of the two year discretion
Question
Will the Commissioner allow an extension of time to 20XX for you to dispose of your ownership interest in the dwelling and disregard the capital gain you make on the disposal?
Answer
Yes
Having considered your circumstances and the relevant factors, the Commissioner will allow an extension of time. Further information about this discretion can be found by searching 'QC 52250' on ato.gov.au
Please note, this ruling only applies to the ownership interest in the dwelling held by the estate, and it does not apply to the remaining ownership interests held in the property by other parties. The normal capital gains tax (CGT) rules will apply to those other interests held in the dwelling in relation to the disposal.
This ruling applies for the following period:
Year ending 30 June 2019
The scheme commenced on:
1 July 2018
Relevant facts and circumstances
The deceased individual (the deceased) passed away in early 20XX.
The deceased's spouse originally purchased a residential property (the property) prior to 20 September 1985, and it was their main residence up until their death in 19XX.
The deceased inherited a share of the property, following the death of their spouse.
In 19XX the remaining shares of the property were inherited by other individuals in equal shares.
The deceased' spouse used the property to produce assessable income prior to their passing in 19XX, however the property was never used to produce assessable income following the deceased inheriting their share of the property in 19XX.
The property was unoccupied from mid 20XX until the settlement of the property took place in mid 20XX, except for a period of nearly one year where the deceased's relative stayed in the property rent-free.
A few months before the deceased passed away the property was placed on the market for sale, and over the two years since the deceased's passing you have had some offers on the property fall through.
Regarding the offers received, as the property was attempted to be sold to developers, each sale contract had 12 month settlement periods to allow for due diligence and council approvals. The offers were withdrawn due to sale prices in the area which the property is situated falling.
The first offer was received a few months prior to the deceased passing away, however after several months, communication with the purchaser ceased and the negotiations stalled. As such the offer was terminated.
The next two offers received, in mid 20XX and early in the following year, proceeded through due diligence but after negotiations the sale price was not reached and the offers were rejected.
Following this a successful sale contract was obtained a couple of months later, where settlement took place in mid 20XX.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-195
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