| Disclaimer This edited version has been archived due to the length of time since original publication.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 private ruling
Authorisation Number: 1012507579080
Subject: Capital gains tax - Deceased estate - extension of two year rule - disposal
Question:
Would the Commissioner exercise the discretion in section 118-195 of the Income Tax Assessment Act 1997 in your particular circumstances?
Answer:
Yes.
This ruling applies for the following period:
Year ended 30 June 2013
The scheme commenced on:
1 July 2012
Relevant facts:
Your parent passed away after 20 September 1985 and you are an executor of the estate
The deceased acquired a property prior to 20 September 1985.
The deceased entered a nursing facility prior to death.
During this period the deceased's property was used to produce income.
The deceased's property continued to be used to produce income for more than two years.
You have been unable to dispose of the property within two years as the will of the deceased was challenged.
During the court proceedings the property was unable to be sold.
The Court proceedings were settled.
The property was prepared for sale and a contract for the sale was signed in the 2013 income year.
The sale of the property has resulted in a capital gain.
Relevant legislative provisions:
Income Tax Assessment Act 1997 Section 104-10
Income Tax Assessment Act 1997 Section 118-195
Reasons for decision:
Due to recent changes to the Income Tax Assessment Act 1997 (ITAA), the Commissioner now has discretion to extend the two year period in the Act 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 (for example, 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 circumstances outside the beneficiary or trustee's control.
These examples are not exhaustive.
In this case, you were unable to dispose of the property within two years of the deceased's death due to the will of the deceased being challenged. Accordingly, you meet the criteria in which the Commissioner may exercise discretion to extend the two year period in which a deceased's main residence must be disposed.