| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your written advice
Authorisation Number: 1051307403477
Date of advice: 13 November 2017
Ruling
Subject: CGT – deceased estate – Commissioner’s discretion to extend the 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 to the two year period until DDMMYY?
Answer
Yes.
This ruling applies for the following periods
Year ended 30 June 2017.
The scheme commences on
1 July 2015.
Relevant facts and circumstances
You were executor of the deceased’s estate and also a beneficiary.
The deceased owned a dwelling which had been previously inherited (the dwelling).
The deceased lived in the dwelling until they fell ill and moved to nursing home until their death some years later.
At the time of the deceased’s death, the dwelling was their main residence.
There were complexities in the deceased’s Will which incurred significant costs, including difficulties in seeking a deed of family arrangement, and legal title of the dwelling had not been properly transferred to the deceased on inheritance.
Following these complexities, the estate was able to be administered sometime after their passing.
You subsequently received legal title to the dwelling and went about preparing it for sale.
The dwelling has never been rented out.
You entered into a contract to sell the dwelling more than two years after the passing of the deceased with settlement occurring shortly after.
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 until settlement on DDMMYY.
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 complexities encountered in the administration of the deceased’s estate, delaying the completion of the administration of the estate and sale of the dwelling.
The Commissioner accepts that it is appropriate to grant the short extension that you have requested.