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Edited version of private advice
Authorisation Number: 1051628486163
Date of advice: 10 March 2020
Ruling
Subject: Capital gains tax - deceased estate - two year discretion
Question
Will the Commissioner allow an extension of time for you to dispose of your ownership interest in the dwelling and disregard the capital gain you make on the disposal?
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 ended 30 June 2019.
The scheme commences on
1 July 2018.
Relevant facts
The deceased acquired a dwelling (the dwelling).
The deceased passed away in 20xx.
The dwelling is situated on land which was originally part of a larger farming property.
The land was subdivided between your relatives equally.
The road access to the dwelling was via this subdivided property. This land is now owned by another relative, ('A')
You commenced preparations for the sale of the dwelling and approached 'A' in relation to the issues with access to the dwelling as access via the traditional entry was denied.
You investigated the possibility of a private access road which would have required an easement to be registered on 'A's property.
You approached the local council around 20xx about the access issues.
You also obtained legal advice about the access issues and the previous access points to the dwelling. You were advised that the subsequent subdivision may make it difficult to rely on the previous certificate of title.
You also engaged the services of a surveyor.
You engaged a registered valuer ('B') who advised that the best option would be to install your own access road to the dwelling. You were also advised that without access to the dwelling the value would be greatly reduced.
A joint application was made to reconfigure the lots to the local council in 20xx.
Ongoing discussions were had with the local council in relation to the application.
You became aware in 20xx that the application had been withdrawn by 'A'.
You contacted the local council directly around 20XX in relation to accessing the dwelling via your own land.
Numerous meetings and obstacles were encountered in obtaining approval to install the access road during the period 20XX to 20XX.
You began construction of the access road from 20XX.
In 20XX the power pole that provided electricity to the dwelling fell over and power was disconnected as a result.
The electricity provider would not give permission for a new supply to be routed across the adjoining property.
You decided to route the electricity underground which required significant earthworks. This work commenced in 20xx and was completed in 20xx.
The difficulties in accessing the dwelling created significant delays in selling the dwelling.
The expenses that you have incurred have been required in order to sell the dwelling.
The dwelling was prepared for sale and placed on the market in early 20xx.
An auction was undertaken in 20xx which was successful.
Settlement occurred in 20xx.
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)
Further information
The main residence exemption extends to a maximum of two hectares of land adjacent to the dwelling, including the area of the land on which the dwelling is built (exempt land).
Where land exceeds two hectares, Taxation Determination TD 1999/67 (TD 1999/67) outlines how to calculate any capital gain or capital loss on land in excess of the two hectares for the main residence exemption.