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Edited version of your private ruling
Authorisation Number: 1012512269053
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 2015
The scheme commenced on:
1 July 2013
Relevant facts:
The deceased passed away after 20 September 1985.
Probate of the estate was granted in the 2012 financial year.
The deceased owned a property.
The deceased will has been challenged by children of the deceased.
Mediation was undertaken between the parties, the mediation was unable to resolve the issues in dispute.
The matters have been set down for hearing.
The deceased property will be sold more than two years after death; subject to any other order made by the court.
The sale of the property of the deceased will result 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 are 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.