Edited version of private advice

Authorisation Number: 1052148183411

Date of advice: 28 July 2023

Ruling

Subject: Commissioner's discretion - inherited property

Question

Will the Commissioner exercise the discretion to allow an extension of time for you to dispose of your ownership interest in the property and disregard the capital gain or capital loss you made on the disposal?

Answer

Yes.

Having considered your circumstances and the relevant factors the Commissioner will allow an extension of time. Further information about the Commissioner's discretion can be found by searching ato.gov.au for 'QC 66057'

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

At some time after 1985, the deceased's parent purchased the property.

The property was situated on less than two hectares of land.

Shortly after, the deceased's parent passed away. Under the will, the Trustees for the deceased held a lifetime trust over the property to fulfil their parent's wish to ensure they always had a home. The Trustees managed the deceased's finances due to their drug and mental health issues. The will also provided that the property pass to you (the deceased's sibling) should you survive them.

The property was the main residence of the deceased just before they passed away and was not used to produce assessable income at that time.

Several years later, the deceased passed away intestate. The Trustees administered the estate and advised that you could not begin preparing the property for sale until you received legal title.

Several months later, you received title to the property.

Shortly after, there was a period of COVID-19 restrictions.

Later, you signed a building contract to complete repairs and renovations to the property. In a letter from the builder, they advised the property was in an unsellable condition due to; the unclean state, smell, health risks posed from frequent drug use in the property, damage to the walls, windows, and ceilings inflicted by the deceased. The builder recommended the property be completely gutted in accordance with the OH&S Act 2004. The builder also noted numerous delays due to COVID-19 restrictions impacting material delivery and attending the property.

Later, the builder commenced the repairs and renovations.

Shortly after, you emailed a conveyancer to initiate paperwork in preparation for the sale of the property.

Several months later, the builder completed the repairs and renovations.

Shortly after, you engaged a real estate agent to sell the property.

Later, the property sold. You negotiated the shortest possible settlement time with the purchaser.

The property settled less than 2 months after the end of the two-year period.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 118-195

Income Tax Assessment Act 1997 Section 128-15

Income Tax Assessment Act 1997 Section 128-20

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