Edited version of private advice

Authorisation Number: 1051933542074

Date of advice: 18 January 2022

Ruling

Subject: Capital gains tax - deceased estate

Question

Will the Commissioner exercise his discretion under section 118-195 of the Income Tax Assessment Act 1997 to extend the two-year period to dispose of the dwelling?

Answer

Yes. Having considered your circumstances and the relevant factors, the Commissioner will extend the two-year period to dispose of the dwelling to the settlement date. Further information about this discretion can be found by searching 'QC 66057' 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 and circumstances

The deceased died X of years ago.

The property was acquired by the deceased after 1985.

The property was the deceased's main residence for the whole of their ownership period.

The property was not used to produce income.

The property was less than 2 hectares.

Probate was granted a few months after the deceased died.

The property was sold several weeks outside the allowed 2 year time period due to the title being missing and the need to obtain another one, and also due to the pandemic and the impact it had on your business.

Following the deceased's death the title to the property could not be located and you were required to make an application to Landgate for a duplicate title.

The title was issued to you at the end of the year in which the deceased died.

You experienced the following circumstances that lead to a delay in sale of the property from the time that you received the title to the end of the following year as follows:

·                    You owned a small business.

·                    You experienced stress and time pressures due to government restrictions being placed on business during the pandemic.

·                    You were required to close down for a period of time.

·                    You were forced to provide alternative options to your clients.

·                    You attempted to branch out into other methods of delivering your services.

·                    You lost a number of clients during this period along with income.

·                    The business did not return to near normal operations until late in the following year.

The property was placed on the market on at the end of the year.

An offer was received in the following month and a contract for sale was signed a few days later.

Settlement was to occur 21 days from the signing of the contract and the purchaser had some problems obtaining finance and the property settled a few weeks later.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195