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Edited version of private advice
Authorisation Number: 1051629735965
Date of advice: 3 February 2020
Ruling
Subject: Capital gains tax - Deceased estate - 2 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 2020.
The scheme commences on
1 July 2019.
Relevant facts
The deceased acquired a dwelling (the dwelling).
The deceased passed away in 20xx.
The dwelling had been the deceased's main residence prior to passing away.
The deceased vacated the dwelling and resided in a nursing home.
The dwelling was left vacant and was not used to produce assessable income.
In 20xx an extended family member notified a local Solicitors office of the deceased's death. ('A')
'A' advised that they held a will made in 20xx in which the deceased appointed 'A' as executor. (Will 1)
Further investigation was undertaken and a subsequent will made by the deceased in 20xx was located and which named 'B' a relative by marriage as the executor. (Will 2)
A dispute ensued in relation to Will 2 as the executor of Will 1 considered that the deceased lacked testamentary capacity at the time of drafting Will 2.
The beneficiaries named in both Wills are different.
A writ to prove Will 1 was filed in 20xx and was issued by the relevant Court in 20xx.
The dispute took some time to resolve and ultimately the executor of Will 1 was able to administer the estate and was granted the power by the Court to sell the dwelling around the middle of 20xx.
The dwelling was cleared of personal items and chattels many of which were regarded as precious by the beneficiaries. None of the beneficiaries reside in the relevant state and this caused some further delays.
The dwelling was vacant for a significant period and as a result fell in a state of disrepair.
The dwelling was prepared for sale and settlement occurred shortly after 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)