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Edited version of your written advice
Authorisation Number: 1012971648427
Date of advice: 23 February 2016
Ruling
Subject: Deceased estate and Commissioner's 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 dd/mm/yyyy?
Answer:
Yes.
This ruling applies for the following period:
20XX income year
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
Your parent passed away X years ago.
You are one of two beneficiaries to your parents' estate.
The property was purchased after 1985.
It was not used for income producing purposes.
The property was put on sale X months ago.
A contract for sale was made on within two years of date of death. Settlement was 30 days later.
Necessary building maintenance needed to be undertaken prior to sale.
The other beneficiary was working interstate and this held up the completion of the work.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 104-10,
Income Tax Assessment Act 1997 Subsection 118-130(3) and
Income Tax Assessment Act 1997 Section 118-195.
Reasons for decision
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 dd/mm/yyyy.
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, your settlement of sale falls nineteen days outside the two year period.
Maintenance of the building led to it not being able to be advertised for sale until X months ago.
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.