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Edited version of private advice
Authorisation Number: 1051806983792
Date of advice: 25 February 2021
Ruling
Subject: Commissioner's discretion to extend the two year time limit to dispose of a dwelling
Question
Will the Commissioner exercise the discretion under 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) and allow an extension of time?
Answer
Yes. Having considered your circumstances and the relevant factors, the Commissioner is able to apply his discretion for up to two hectares of land with your dwelling 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 ended 30 June 20XX
The scheme commences on
1 July 20XX
Relevant facts
The deceased acquired a dwelling. (The dwelling).
The dwelling was initially used as a holiday house.
The deceased passed away in 20xx. (The deceased)
The deceased had occupied the dwelling as their main residence from 20xx and the dwelling remained the deceased's main residence.
The dwelling is located on land that is more than two hectares.
Probate was granted in 20xx.
The executors encountered difficulties in disposing of numerous bulky antique items that were stored on the property and specialised hobby equipment.
The land surrounding the dwelling was impacted by a bushfire and a controlled burn which was not contained. This caused substantial damage. An insurance claim was lodged and this took time to resolve before the dwelling could be placed on the market for sale.
COVID-19 also impacted on the ability of an executor to attend to the preparation for sale of the dwelling as the executor resides interstate.
An offer was accepted to purchase the dwelling, however a deposit was not forthcoming despite several assurances from the purchasers conveyancer.
A buyer was found and a contract was accepted with settlement occurring in 20xx
Relevant legislative provisions
Income Tax Assessment Act 1997 subdivision 115-A
Income Tax Assessment Act 1997 section 102-20
Income Tax Assessment Act 1997 section 104-10
Income Tax Assessment Act 1997 section118-120
Income Tax Assessment Act 1997 section118-130
Income Tax Assessment Act 1997 section 118-195
Further issues for you to consider
• Main residence exemption and land that is more than two hectares
Land is adjacent to a dwelling if it is close to, near, adjoining or neighbouring the dwelling. The land a dwelling is actually on is included as part of the dwelling and is not part of adjacent land.
If the adjacent land is used for private purposes and is greater than two hectares, you can choose which two hectares are exempt. The remainder is subject to CGT.