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Edited version of your written advice
Authorisation Number: 1051212702081
Date of advice: 10 April 2017
Ruling
Subject: Capital gains tax - deceased estate - Commissioner's discretion two year period
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?
Answer
Yes.
This ruling applies for the following period
Year ended 30 June 20XX.
The scheme commences on
1 July 20XX.
Relevant facts and circumstances
The deceased acquired a dwelling.
The deceased passed away about three years ago.
The dwelling was the deceased's main residence at the time of death.
The dwelling was not used to produce assessable income.
Under the deceased's will, the deceased appointed their children, to be the executors and the trustees of the estate.
The nominated executors accused each other of wrongdoing and couldn't cooperate to administer the estate (the family dispute).
The nominated executors appointed you, to administer the will.
Probate was granted about two years ago.
Following the family dispute, you and the nominated executors' solicitors settled the matter, and you received clearance to sell the dwelling.
The dwelling was sold and settled.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 104-10
Income Tax Assessment Act 1997 subsection 118-130(3)
Income Tax Assessment Act 1997 section 118-195
Income Tax Assessment Act 1997 subsection 118-195(1)
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.
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.
The delay in disposing of the dwelling was due to the complexity of the deceased estate which delayed the completion of the administration of the estate.
The Commissioner accepts that it is appropriate to grant the short extension that you have requested.