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Edited version of your written advice
Authorisation Number: 1012938372526
Date of advice: 19 January 2016
Ruling
Subject: Capital gains tax - Commissioners discretion
Question
Will the Commissioner exercise his discretion under subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) in relation to the dwelling on the property and allow an extension of time until October 20XX?
Answer:
Yes.
This ruling applies for the following period:
2015 income year
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The deceased acquired the residential property prior to 19 September 1985.
The deceased passed away in 20WW.
The property was held by Trustees of the Estate from the date of death until its eventual sale in late. The property was held for more than 30 months by the Trustees.
An appointment of Trustee was not made until 12 Months after the deceased's death.
The deceased died intestate.
The beneficiaries were not identified until mid 20XX.
The residence was disposed of within six months of your being notified of that you were a beneficiary of the estate.
Reasons for decision
Summary
The Commissioner will exercise his discretion under subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) and allow an extension of time until October 20XX.
Detailed reasoning
The capital gains provisions allow for concessional treatment to be given to a dwelling that was owned by a deceased person if the executors of the deceased person's estate sell that dwelling within two years of the date of death.
Any capital gain or capital loss made on the sale of such a dwelling is disregarded if the dwelling was:
• Acquired by the deceased before 20 September 1985, or
• The deceased's main residence when they died.
The Commissioner has the discretion to extend the two year period. This extension is generally only granted where the executors are merely arranging the ordinary sale of the dwelling and the cause of the delay is beyond their control (for example, if the will is challenged). There must not be any other factors mitigating against exercising it.
In this case, the Trustees were not appointed until 12 months after your parent's death.
They did not identify the beneficiaries to the estate until mid-20XX, and the property was sold in later 20XX.
Some of the steps the Trustees needed to complete prior to the sale were delayed due to the unavoidable events disclosed in your private ruling request.
As a result of these delays, the sale of the property could not be completed until after the two year deadline expired.
The Commissioner accepts that it is appropriate to grant the short extension that you have requested.