Edited version of private advice

Authorisation Number: 1052049994532

Date of advice: 7 November 2022

Ruling

Subject: CGT - deceased estate

Question

That the 2-year limit on the CGT main residence exemption can be extended for an inherited property.

Answer

Yes

Having considered your circumstances and the relevant factors, the Commissioner will allow an extension of time. Practical Compliance Guideline PCG 2019/5 provides the administrators with a safe harbour where the deceased's property cannot be sold and settled within 2 years of the deceased's death. Further information about this discretion can be found by searching 'QC 66057' on ato.gov.au.

This ruling applies for the following period:

Year ending XX June 20XX

The scheme commences on:

XX July 20XX

Relevant facts and circumstances

The deceased acquired legal ownership of the property on XX October 20XX, inherited in their Parent's will (X X X - died X X 20XX).

The deceased passed away on XX August 20XX - intestate.

The land the dwelling was situated on was less than 2 hectares.

The dwelling was never rented out and was occupied by the deceased as their main residence continuously until the date of their death.

The dwelling remained unoccupied after the deceased's death.

There are x deceased relatives and the administrators parent who had equal shares as beneficiaries.

One of these deceased relatives x children live in another State, the other x deceased relatives who lived overseas had X children between them.

The administrators were the closest relatives and the only ones living in the same city as the property. They engaged Lawyers 1 on XX 20XX to act on their behalf and apply to be administrators. They terminated their service shortly after this date as they were unable to make any progress.

On the XX October 20XX the administrators engaged Lawyers 2, who began the process of preparing affidavits in support of the application for administrators, which were then filed with the Probate office.

The administrators first applied to become administrators in February 20XX. They were appointed and confirmed administrators on XX November 20XX.

In May 20XX the lawyer who was acting on the administrator's behalf had their employment terminated during the first Covid lockdown. After a few emails went unanswered they found out that no other lawyers in that firm had estate knowledge. They were forced to seek another law firm.

On XX June 20XX Lawyers 3 were engaged, however the lawyer assigned to act for the administrators resigned in July.

On XX July 20XX this law firm assigned a different lawyer who amended the affidavits to meet additional conditions required by the Probate Office.

On XX October 20XX revised affidavits are emailed to all beneficiaries overseas.

From the XX October 20XX to XX October 20XX was affected due to factors out of the administrators' control:

•         Serious family health issues with two beneficiaries in COUNTRY B,

•         X beneficiaries' family business was impacted by Covid lockdowns and required much time and effort to stay afloat.

•         X beneficiaries' unable to find lawyers willing to witness the required affidavits, citing lack of knowledge of Australian estate law.

On XX October 20XX, an Australian lawyer was granted approval from the Supreme Court of Victoria Probate Division to witness the X affidavits via zoom video link.

On XX November 20XX the administrators parent passed away, they were executors for their estate.

The Probate Office granted letters of administration on the XX 20XX.

From December 20XX to January 20XX, the administrators prepared the property for sale.

On XX February 20XX a real estate agent was selected.

On XX March 20XX the property was put on the market.

On XX April 20XX property was sold and the contract of sale signed, a XX month settlement was requested as a condition of the purchaser.

Settlement took place on the XX of September 20XX.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195

Practical Compliance Guideline (PCG) 2019/5