Edited version of private advice

Authorisation Number: 5010084879096

Date of advice: 31 August 2022

Ruling

Subject: Capital gains tax - Commissioner's discretion

Question 1

Will the Commissioner extend the two-year period in subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes. Having considered the circumstances, including the court proceedings dispute between beneficiaries the Commissioner is able to exercise the discretion under subsection 118-195(1) of the ITAA 1997 and allow an extension of time.

Question 2

Will the Commissioner extend the two-year period in subsection 152-80(3) of the ITAA 1997?

Answer

Yes. The Commissioner accepts that the deceased would have been entitled to the 15 year exemption just prior to their death. Having considered the circumstances, including the court proceedings and dispute between beneficiaries, the Commissioner is able to exercise the discretion under subsection 152-80(3) of the ITAA 1997.

This private ruling applies for the following period:

30 June 2022

The scheme commences on:

1 July 2021

Relevant facts and circumstances

The deceased owned the following properties:

Property 1

The deceased and their spouse purchased property 1 as joint tenants prior to 20 September 1985.

The deceased built the house on the property and lived there with the spouse.

Their spouse died prior to 20 September 1985 and the property was transferred to the deceased prior to 20 September 1985.

Property 2

The deceased purchased the property after 20 September 1985.

The deceased operated a farm at the property until 20XX. Between 20XX and 20XX the deceased operated another business from the property.

In 20XX the deceased entered a contract to purchase land elsewhere and transferred their business activities to this land.

The deceased carried businesses up until the time of their death. The deceased's turnover for the relevant year was less than $2 million.

The deceased died in the 20XX-XX financial year.

The deceased left a Will which appointed their children as executors.

The executors were unable to act together because of a dispute.

Individual A was asked to apply for a grant of letters of administration.

The Court made the orders appointing individual A as administrator by Court Order in 20XX.

The Grant was issued in 20XX.

In 20XX, one of the beneficiaries commenced proceedings against their sibling with a claim they misappropriated the deceased's funds.

In 20XX a Deed of Settlement was entered into which resolved the pre-death misappropriate allegations.

The Administrator attempted to facilitate an agreement between the beneficiaries as to how they would take the property/their consent to sell the property.

As the beneficiaries could not agree about how they should receive the property or to sell it, a court application was necessary.

In 20XX, the Administrator filed an application in the Supreme Court for directions to sell the property

The court made the order in 20XX permitting the Administrator to sell the property.

The Administrator then took steps to ready both properties for sale and list them for auction.

The properties sold at auction on XX March 20XX.

Settlement of the contract took place on XX April 20XX.

Relevant legislative provisions

Income Tax Assessment Act 1997 subsection 118-195(1)

Income Tax Assessment Act 1997 subsection 152-80(3)