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Edited version of private advice
Authorisation Number: 1051616368898
Date of advice: 2 December 2019
Ruling
Subject: Capital gains tax - Deceased estate - request for an extension to the two year discretion
Question
Will the Commissioner exercise his discretion under section 118-195 of the Income Tax Assessment Act 1997 to allow an extension of time to the two year main residence exemption on your ownership interest in the dwelling including adjacent land up to two hectares to 20XX?
Answer
Yes.
Having considered your circumstances and the relevant factors, the Commissioner will allow an extension of time. Further information about this discretion can be found by searching 'QC 52250' on ato.gov.au
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
The deceased died in the 20XX-XX financial year.
The deceased's husband died in 20XX.
The assets of the estate consisted of the following:
· A main residence;
· Five other properties;
· Various bank accounts;
· Motor vehicles; and
· Numerous items of old tools and farm equipment.
The Will provided rights of occupancy to various persons to reside in certain properties owned by the deceased as well as gifting certain properties to the residual beneficiaries in equal shares.
There was some difficulty identifying some assets.
The interests in some properties were acquired by the deceased prior to 1985 or via survivorship on the death of the deceased's spouse.
One of the beneficiaries gave notice in early 20XX of their intention to pursue a Family Provision Application under Part 4 of the Succession Act 1981 seeking further provision from the estate.
Furthermore, there were additional claims against the estate by some beneficiaries.
Various attempts over a period of months were made to reach an "in principle" agreement to resolve the claims and settle the various disputes.
On xx xxxxx 20XX, a draft deed of family arrangement was sent to all interested parties including their respective legal representatives for review and comment. This was followed by further negotiations regarding the wording and resolutions of the claims.
Execution of the deed was finally completed on xx xxxxx 20XX. A copy is attached.
The deceased and their spouse have resided at the residence prior to 1985.
The property was the deceased's main residence for the whole of their ownership period.
An estate agent was formally appointed after there was some relative certainty that negotiations would likely resolve the various disputes.
The property was listed for sale on XX July 20XX and an auction sale contract was signed on XX August 20XX with settlement occurring on XX September 20XX.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-195