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Edited version of private advice
Authorisation Number: 1051798903848
Date of advice: 29 January 2021
Ruling
Subject: Commissioner's discretion to extend the two year time limit to dispose of a dwelling
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 20XX
The scheme commences on
1 July 20XX
Relevant facts
The deceased acquired a dwelling. (The dwelling).
The deceased passed away in 20XX. (The deceased)
The dwelling had been the deceased's main residence prior to passing away.
The dwelling is situated on land which is larger than 2 hectares.
A legal dispute arose in relation to the will of the deceased and a loan agreement between one of the beneficiaries and the deceased. This caused delays in administering the estate as a grant of probate was not obtained prior to the resolution of the dispute.
A formal agreement between the beneficiaries was reached in 20XX.
A grant of probate was issued in 20XX.
The dwelling remained vacant.
The dwelling was placed on the market and a contract for the sale was signed in 20XX.
Settlement occurred a short time later.
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 issues for you to consider
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). The land does not have to be contiguous to, that is, touching or in contact with, the land on which a dwelling is situated to be 'adjacent' to the dwelling (Taxation Determination TD 1999/68). Adjacent land is only included in the two hectare exemption if the land is used primarily for private or domestic use and not to earn assessable income, such as primary production.
Any excess land (non-exempt land) over the two hectares will be subject to the CGT provisions as it is not covered by the main residence exemption.