Edited version of private advice

Authorisation Number: 1052066689910

Date of advice: 9 December 2022

Ruling

Subject: CGT - Commissioner's discretion - deceased estate

Question

Will the Commissioner exercise his discretion to allow an extension of the 2-year limit for the capital gains tax (CGT) exemption on the sale of the dwelling by the deceased estate of the deceased's main residence?

Answer

Yes. Having considered the circumstances and relevant factors you have provided; the Commissioner will exercise his discretion and allow an extension of the 2-year limit for an exemption from CGT on the disposal of the dwelling. CGT is disregarded from the deceased's date of death until the disposal of your ownership interest in the dwelling. Further information about this discretion can be found by searching 'QC 66055' on ato.gov.au.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

The deceased passed away in late 20XX.

It was acquired by the deceased approximately in 19XX.

The dwelling was the main residence of the deceased at the time of their passing.

You were appointed the executor of the deceased estate.

There are two beneficiaries.

The delayed registration to you as executor was a result of:

•         the Codicil being processed and cleared through the court

•         the caveat on the property needing to be removed

•         probate needing to be finalized.

The codicil was lodged with the State's Supreme Court in late 20XX and was still in dispute in late 20XX. The dispute was raised by the solicitors. The transfer transmission was lodged early 20XX.

Probate was not granted until late 20XX.

In early 20XX you were advised by your solicitor that you needed to remove an improper dealings caveat that had been place on the dwelling. This was lifted in mid-20XX.

The deceased placed the caveat on the dwelling prior to their passing as they were concerned by telephone calls they were receiving from Country A about the dwelling and were concerned about being scammed. The caveat was a precaution to minimize the risk and to prevent improper dealings.

Communication with one of the beneficiaries was delayed as they were estranged from the family and had been in a care facility. The only contact with this beneficiary had been through the deceased.

You attempted contact with the beneficiary but were not allowed contact as their guardian was not present. You have limited capability to speak, read or write the language. You also had no other family member that was able to assist.

You became aware that the beneficiary's guardian lived approximately Xkm from the nursing home and they do not speak English. Your lawyer attempted to find out whether the guardian was legally appointed to assure the guardian has the legal capacity to make decisions on the beneficiary's behalf.

You last received a letter from your lawyer in early 20XX advising you that they were still trying to find this out. You are still waiting for the appropriate information to distribute that estate to the beneficiaries.

Between early 20XX and late 20XX, there were the following delays:

•         works that had to be done on the dwelling to make it ready for sale

•         work to comply with regulations

•         electrical work

•         repairs on the property due to a storm

•         settlement date change.

The outbreak of COVID-19 created the following delays:

•         difficulty communicating with the beneficiary who resides in an Country A by restricting their guardian from seeing them and preventing items and issues listed in the will being resolved

•         you and another beneficiary were unable to travel and personally finalize the deceased's will and wishes

•         work on the property had to be scheduled around COVID-19 restrictions

•         COVID-19 restriction zones prevented potential buyers viewing the dwelling.

You engaged with the real-estate in mid-20XX.

The dwelling was listed for sale in mid-20XX.

The contract date for the sale of the dwelling was mid-20XX and the settlement date was late 20XX.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).