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Edited version of your written advice
Authorisation Number: 1051315259010
Date of advice: 1 December 2017
Ruling
Subject: Capital gains tax – 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?
Answer
Yes.
This ruling applies for the following period
Year ended 30 June 201C.
The scheme commences on
1 July 201B.
Relevant facts
The deceased acquired a dwelling prior to 20 September 1985 (the dwelling)
The deceased passed away in 201A. (The deceased)
The dwelling was used to produce assessable income.
The dwelling was transferred to you as beneficiary.
The deceased agreed to allow the existing long term tenants to remain residing in the dwelling until suitable alternative accommodation could be obtained. You experienced significant delays in locating suitable accommodation.
You have a number of medical conditions which have deteriorated since the date of the death of the deceased.
Your medical conditions have made attending to the sale difficult as you do not reside in the local area and interstate travel causes complications.
You also experienced some delays in obtaining engineering reports and council certificates so that an appropriate market valuation could be determined prior to sale.
The dwelling was prepared for sale and listed in 201B.
A lengthy advertising period eventually resulted in an offer being accepted for the sale of the dwelling in 201B.
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 you being unable to attend to the deceased estate due to serious personal circumstances arising during the two year period.
The Commissioner accepts that it is appropriate to grant the short extension that you have requested.