Edited version of your private ruling

Authorisation Number: 1012479788793

Subject: Income Tax : Extension of Time

Ruling

Question and answer:

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?

Yes.

This ruling applies for the following period:

Year ending 30 June 2013.

The scheme commences on:

1 July 2012.

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.

A relative died in 2011 leaving you a residential property that was their main residence up until shortly before their death.

The property was not used for producing assessable income.

You are the sole beneficiary of the property

Over the 30 years the previous occupants were in the property it had accumulated a large amount of goods and chattels and have fallen into disrepair.

As you are elderly and suffer various medical issues you have been unable to appropriately prepare the property for sale in a timely manner.

You required the help of your relative in the preparation for sale of this property; however she was also preoccupied with caring for her own elderly relative.

The sale of the property was finalised in 2013

Relevant legislative provisions

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

Reasons for decision

Under subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) a capital gain or capital loss can be disregarded on the sale of a dwelling acquired from a deceased estate where:

the dwelling was acquired by the deceased after 20 September 1985 and the dwelling was the deceased's main residence just before their death and was not used for producing assessable income, and

the dwelling was sold within two years of the deceased's death, or within a longer period allowed by the Commissioner.

In this case the dwelling was your relative's main residence just before their death and was not used for producing assessable income.

However, the dwelling was sold outside the two year period outlined in subsection 118-195(1) of the ITAA 1997. Therefore, the estate will only be able to disregard the capital gain from the sale of the dwelling if the Commissioner grants an extension to the two year time limit.

· The Commissioner has discretion to extend the two year period in subsection 118-195(1) of the ITAA 1997, where:

· the ownership of a dwelling or a will is challenged;

· the complexity of a deceased estate delays the completion of administration of the estate;

· a trustee or beneficiary is unable to attend to the deceased estate due to unforeseen or serious personal circumstances arising during the two year period (e.g. the taxpayer or a family member has a severe illness or injury); or

· settlement of a contract of sale over the dwelling is unexpectedly delayed or falls through for reasons outside the beneficiary or trustee's control.

Application to your circumstances:

In this case, you were unable to attend to the deceased estate due to your own age and medical issues. You required the help of your relative who was also preoccupied. These circumstances caused the two year time limit to be exceeded.

Having considered the relevant facts, the Commissioner will apply his discretion under subsection 118-195(1) of the ITAA 1997 and allow an extension to the two year time limit.