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Edited version of your written advice
Authorisation Number: 1051322265446
Date of advice: 20 December 2017
Ruling
Subject: Capital gains tax
Question
Will the Commissioner exercise his discretion under section 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997) and allow an extension of time in relation to the disposal of the main residence and surrounding land respectively up to two hectares, where the cost base of the excess land can be calculated on a pro rata basis when determining the capital gain?
Answer
Yes
Having considered your circumstances and the relevant factors, the Commissioner is able to apply his discretion under subsection 118-195(1) of the ITAA 1997 and allow an extension of time in respect of the disposal of the main residence and surrounding land up to and including two hectares. Further information on the relevant factors and dwellings, structures and adjacent land generally can be found on our website ato.gov.au and entering Quick Code QC22169 into the search bar at the top right of the page.
This ruling applies for the following period:
30 June 2018
The scheme commences on:
1 July 2017
Relevant facts and circumstances
Your relative acquired property that consisted of approximately 1000 acres equating to 404.686 hectares. On this property was the main residence.
The locality of the property is approximately 220 kilometres from a capital city and is located in a quarry area.
The property did not carry on a business but was producing passive income.
Your relative passed away in 20XX.
The property was listed for sale and a purchaser submitted an offer, but the contract of sale has not been executed due to an unforeseen circumstance.
The prospective purchaser is investigating this issue which will take time and delay the expected settlement, which may extend past the two-year period from the date of death.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 104-10,
Income Tax Assessment Act 1997 Subsection 118-115,
Income Tax Assessment Act 1997 Subsection 118-120 and
Income Tax Assessment Act 1997 Section 118-195,
Further issues for you to consider
ATO Interpretative Decision 2002/691 – CGT: Main residence – apportioning cost base of land in excess of two hectares.
Taxation Determination 1999/67 – if you land exceeds two hectares (example 2).