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Edited version of private advice
Authorisation Number: 1051684311832
Date of advice: 22 May 2020
Ruling
Subject: Capital gains tax - deceased estate - disposal of main residence
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?
Answer
Yes.
We note the deceased gave a relative permission to reside in the deceased's main residence after their death, and this agreement was acknowledged by the beneficiaries of the estate. However, as a life or other equitable interest was not provided in the will, this generally would not be a sufficient reason for an extension. However, in your case the sale of the main residence was also delayed because the will was challenged by a beneficiary, and for this reason the Commissioner is able to apply his discretion under subsection 118-195(1) of the ITAA 1997, and 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 commences on:
1 July 20XX
Relevant facts and circumstances
The deceased died on XX/XX/20XX.
Probate of the will was granted on XX/XX/20XX.
Prior to their death, the deceased gave their relative, W, a right to reside in the deceased's main residence until their death or until they were unable to remain there. The right of residence was given verbally and acknowledged by all beneficiaries.
A life or other equitable interest was not provided in the will.
After probate was granted, ownership of the property and conditions of the will were challenged by a beneficiary, Z.
Negotiations with Z took a substantial amount of time.
Before an agreement with Z was reached, W moved into an aged care facility.
In XX/20XX an agreement was reached with Z.
Settlement of the sale of the deceased's main residence occurred shortly afterwards.
The property was less than 2 hectares.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 118-195(1)