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Edited version of private advice

Authorisation Number: 1052032294345

Date of advice: 23 September 2022

Ruling

Subject: CGT - deceased estate - Commissioner's discretion

Question

Will the Commissioner exercise his discretion under subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) and allow an extension of time to the 2 year period to dispose of the inherited property?

Answer

Yes.

Whether the Commissioner will exercise his discretion under subsection 118-195(1) of the ITAA 1997 will depend on the facts of each case.

We have taken the facts of your situation into consideration when determining whether the Commissioner's discretion would be exercised to extend the 2 year period and allow an extension to the 2 year period until settlement on the disposal of the dwelling occurred. Therefore, any capital gain made on the disposal of the dwelling can be disregarded.

We accept that the reason for the delay in the disposal of the deceased's dwelling was due the reasons provided in your private ruling application and that they were beyond your control.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

The Property was built and moved into by the deceased and her spouse before 20 September 1985.

The Deceased moved into residential aged care from XXXX.

The Property was the Deceased's main residence for the entire time until their death.

The deceased passed away on XXXX.

The Property had never been used to produce income.

The Deceased's child resided at the Property most of their life. From the time the Deceased moved to aged residential care until sale of the Property, the child met basic maintenance costs such as rates and water. They did not pay any rent.

There were no major repairs on the Property.

The contract for sale for the Property was XXXX and settlement occurred on XXXX.

The sibling moved to a retirement village in XXXX.

There was no legal challenge to the estate.

There was no delay in obtaining probate to administer the Deceased's estate.

Summary of events contributing to the delay in sale of the Property:

1.           Delay in the sibling finding alternative accommodation contributed to by their ongoing XXXX health conditions.

2.           COVID-19 movement restrictions and lock-down periods in NSW impacting the ability to travel and prepare the property for sale.

3.           Siblings were unable to assist in the disposal of the property due to the distance of their individual residences from the Property.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195

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