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Edited version of your written advice
Authorisation Number: 1051319693170
Date of advice: 13 December 2017
Ruling
Subject: Capital gains tax – deceased estate – Commissioner’s discretion
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.
This ruling applies for the following period
Year ended 30 June 201Y.
The scheme commences on
1 July 201X.
Relevant facts and circumstances
The deceased acquired a dwelling (The dwelling)
The deceased passed away a number of years ago. (The deceased)
The dwelling was the deceased’s main residence.
The deceased’s will provided a right occupy the dwelling to their (‘A’)
‘A’ occupied the dwelling until 201X when they moved into residential care.
The dwelling was prepared for sale and placed on the market.
An offer was accepted a short time later in 201X.
Settlement will occur in early 201Y.
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 the requested date.
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.
You were unable to dispose of the dwelling during the two year period as the dwelling was occupied by ‘A’ who had a right to occupy the dwelling under the terms of the deceased’s’ will.
The Commissioner accepts that it is appropriate to grant the extension that you have requested.