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Edited version of private advice
Authorisation Number: 1052030379341
Date of advice: 12 October 2022
Ruling
Subject: Commissioner's discretion - deceased estate
Question
Will the Commissioner exercise his discretion as provided under subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the two-year capital gains tax (CGT) exemption to dispose of the dwelling?
Answer
Yes. Having considered your circumstances and the relevant factors, the Commissioner will allow an extension of time. 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 leaving an estate to be distributed to their two children.
The deceased owned a property (acquired with their spouse). The dwelling was constructed the same year that the property was purchased and was the main residence of the deceased.
The deceased's spouse passed away a number of years prior.
Under the deceased's will, the dwelling at was be sold and the proceeds distributed to their two children.
The dwelling is on a property that is less than two hectares.
The deceased's two children were also executors of the will.
The deceased had previously gifted Child A the property which is adjacent to the deceased's residence.
Child B had been left an amount of money in the will of the deceased which was provided with the intention of compensating for the property gifted to Child A.
The driveway and utilities line to the deceased's property went through the property which belonged to Child A.
Child A sought independent legal advice as they intended to contest the will.
Both children agreed to a boundary adjustment and settled the contest of the will by verbal agreement in order to make the property saleable.
Child B agreed to pay Child A the value of the land she was to lose in the boundary adjustment out of her share of the distribution from the estate of their parent.
The valuation of the boundary adjustment took seven months to complete.
The granting of probate took six months from the date of application.
Child B had a serious medical condition which required treatment and doctors' appointments spanning several months.
Child A also had a serious injury which required a month of recovery time.
The boundary adjustment took six months to complete from engaging the surveyors to council approval.
Utilities lines were required to be moved after the completion of the boundary adjustment.
The dwelling was put under contract approximately 2 years and 8 months after the date of death.
The sale was settled approximately 2 years and 11 months after the date of death.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-195
Income Tax Assessment Act 1997 subsection 118-195(1)
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