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Edited version of your written advice
Authorisation Number: 1013001193525
Date of advice: 26 April 2016
Ruling
Subject: CGT - deceased estate - extension of time
Question
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?
Answer
Yes, until dd/mm/yyyy.
This ruling applies for the following periods:
Year ending 30 June 2016
Year ending 30 June 2017
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The deceased passed away in 20XX.
Their main residence was purchased prior to 20 September 1985.
You were in the process of building your home on the deceased's land, so that you were able to provide care for the deceased.
They passed away before the house was completed. You needed to complete the build as your previous residence had been sold.
The local council imposed conditions on you that you were not aware of at the time. This meant the Strata Title registration was not received until recently.
The deceased's house was listed for sale in 20XX.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 118-195(1).
Reasons for decision
Subsection 118-195(1) of the ITAA 1997 states that if you are an individual who owns a dwelling in a capacity as trustee of a deceased estate, then you are exempt from tax on any capital gain made on the disposal of the property if:
• The property was acquired by the deceased before 20 September 1985; and
• your ownership interest ends within two years of the deceased's death (the Commissioner has discretion to extend this period in certain circumstances).
In your case, the property was purchased by the deceased before 20 September 1985 and has not been sold within the two year time limit.
Therefore, you will only be able to disregard the capital gain from the sale of the property if the Commissioner grants an extension to the two year time limit.
The Commissioner can exercise his discretion in situations such as 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
Having considered the relevant facts, the Commissioner is able to apply his discretion under subsection 118-195(1) of the ITAA 1997 and allow an extension to the two year time limit. Accordingly, if the property is sold by dd/mm/yyyy you will be entitled to disregard the capital gain on the sale of the property.