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Edited version of private advice

Authorisation Number: 1051840598295

Date of advice: 20 May 2021

Ruling

Subject: Capital gains tax

Question

Will the Commissioner exercise his discretion under section 118-195 of the Income Tax Assessment Act 1997 to allow an extension of time to the two years main residence exemption?

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

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

The deceased died on mid 20XX.

The property was purchased by the deceased in 20ZZ.

The deceased owned the property.

The property was the deceased's main residence for the whole of the ownership period.

The property was less than X hectares.

Probate was granted on late 20XX.

The property was not used to produce income.

There were legal matters which made the administration of the estate complex and delayed the sale.

The deceased's spouse was the sole beneficiary and remained living in the property while the court claim was being made.

The deceased's spouse was seeking refinancing of the property.

The deceased's child made a family provision claim through the courts on early 20XY.

This took a lot of time due to the following:

•         With Family Provision Claims the estate is required to attempt to locate any other potential claimants - this turned out to be another child of the deceased who was extremely hard to locate and communicate with

•         Lawyers for other parties (beneficiaries) did not lodge documents within correct timeframes at the beginning of the Family Provision Claim causing delays

•         Extensive back and forth correspondence between the legal representatives for the beneficiaries as the spouse and child could not agree on a suitable distribution split. During this period the relationship between the spouse and child deteriorated to an extent that no resolution could be reached and a court order was required to settle the estate.

The court order was granted on late 20YY.

The property was then clean out and made ready for sale.

The property was listed for sale on early 20YX.

A contract for sale was entered into early 20YX.

Settlement occurred on early 20YX.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195

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