Edited version of private advice

Authorisation Number: 1051632687070

Date of advice: 5 February 2020

Ruling

Subject: Capital gains tax - deceased estate - Commissioner's discretion to extend the two year period to dispose of an inherited dwelling

Question

Will the Commissioner exercise his discretion under subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) and allow an extension of time to the two year period to dispose of the Property?

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

Income year ending 30 June 2020.

The scheme commences on

1 July 2019.

Relevant facts and circumstances

The Deceased and their spouse (Person A) purchased the Property after 20 September 1985 as joint tenants.

The Property was their main residence until Person A passed away after a number of years.

Person A's ownership interest in the Property passed to the Deceased.

The Deceased continued to reside at the Property until they passed away.

You, being Person A, are one of the siblings who were nominated as joint executors/beneficiaries under the Deceased's will. You agreed to act as the substituted executor (the Trustee) due to your sibling's work demands.

You and a number of your siblings reside in a different state to where the Property is located, with the remaining sibling/s residing in the same state as the Property.

It was agreed by you and your siblings that the Property would not be rented out and the Property remained fully furnished.

Probate on the Deceased's estate was granted a number of months after the Deceased had passed away.

After a number of months the title of the Property was transferred into your name as the Trustee of the Deceased's estate.

One of your siblings visited the Property on a regular basis to ensure that the Property was maintained and had not wanted to sell the Property. You and your other sibling/s had adhered to your sibling's wishes not to sell the Property until they reluctantly agreed to the sale of the Property and it was listed with a real estate agent less than two years after the Deceased had passed away.

Shortly after their services were engaged, the real estate agent advised that they had received an offer for the Property. Negotiations were undertaken with an agreement on the sale price of the Property being reached after a number of days.

You received a contract of sale sent by the settlement agent for signing shortly after the negotiations with the proposed settlement date to occur within a few months.

You signed the contract of sale and returned it to the settlement agent within a few days of having received it.

The Property had remained vacant from the time the Deceased passed away until the contract of sale was entered into.

After a short period the real estate agent emailed you to advise that the intended purchasers of the Property had experienced problems in relation to the settlement date for their existing property with the settlement on the sale of their property scheduled to occur at a delayed date to occur in a number of months. You were requested to agree to delay settlement on the sale of the Property.

Within a number of days you received an amended contract of sale signed by the intended purchasers with the settlement date changed to a date a number of months after the original settlement date. You signed and returned the contract within a short period.

Settlement on the disposal of the Property occurred a short period after the two year period following the Deceased's passing had ended.

A capital gain was made on the sale of the Property.

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