Edited version of private advice

Authorisation Number: 1052017120697

Date of advice: 4 August 2022

Ruling

Subject: Capital gains tax

Question

Will the Commissioner exercise his discretion under section 118-195 of the Income Tax Assessment

Act 1997 (ITAA 1997) to extend the two-year period to dispose of the 50% ownership interest in the dwelling up to 2 hectares in size?

Answer

Yes. Having considered your circumstances and the relevant factors, the Commissioner will extend the two-year period to dispose of the 50% ownership interest up to 2hectares in the dwelling.

The portion of the property over 2 hectares of the property will be subject to the CGT provisions.

This ruling applies for the following period:

Year ended 30 June 2022

The scheme commences on:

1 July 2021

Relevant facts and circumstances

The deceased passed away over a decade ago.

The deceased acquired the property as joint tenant with Person Z over two decades ago.

This was vacant land when acquired.

The property was over 2 hectares in size.

A main residence was built on the land in around a few years after the purchase of the land and a granny flat was built on the land in the following year.

A couple of years later, ownership was changed to tenants in common 50% each.

The deceased's will gave Person Z the right to reside in the property as long as they wished, with the deceased's share of the property passing to the deceased's children once this right ended.

Person Z died on 4 July 2021, ending their right to reside in the property.

The property was listed for sale a few months later.

Sale contract for the property was signed a few months ago and settled a couple of months later.

The property was never used to produce income.

The reason for the property not selling within the 2 year period was due to the spouse having the right to reside in the property.

Relevant legislative provisions

Income Tax assessment Act 1997 section 118-195