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Edited version of private advice
Authorisation Number: 1051517780756
Date of advice: 17 May 2019
Ruling
Subject: Two year exemption from capital gains tax for a deceased main residence
Question
Will the Commissioner exercise the discretion under 118-195(1) of the Income Assessment Act 1997 and allow an extension of time to the two year period?
Answer
Yes. Having considered your circumstances and the relevant factors, the Commissioner will allow an extension of time and allow you to disregard any capital gain or capital loss made on the disposal of the dwelling under subsection 118-195(1) of the ITAA 1997.
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The owner of the dwelling died in 19XX and left the dwelling to their spouse.
The spouse died in 19XX and it was thought they died intestate and that the children were entitled to the dwelling in equal shares. The dwelling was their main residence and was on land that was less than two hectares.
One of the children (child 1) moved into the dwelling approximately one month after the parent died and remained living there until late 20XX.
From 19XX until 20XX the other child (child 2) attempted to resolve the parents' estates but was obstructed by child 1 who it was thought was trustee of the owners' estate.
Child 2 subsequently engaged a solicitor to assist in settling the estates.
Child 1 informed the solicitor they had the will of the first proprietor however could not produce it.
Legal proceedings were ongoing for a number of years, until the relevant Court made an order removing child 1 as a trustee of the estate and appointed child 2 as the sole trustee.
The dwelling was sold shortly after the Court order was made, outside the two years exemption period.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-195
Income Tax Assessment Act 1997 section 104-10