Edited version of private advice

Authorisation Number: 1052158752426

Date of advice: 28 August 2023

Ruling

Subject: Commissioner's discretion - deceased estate

Question

Will the Commissioner exercise his discretion under subsection 118-195(1) of the ITAA 1997 and allow an extension of time to the two-year period to dispose of the property at XX as part of the estate of the late XX?

Answer

Yes, having considered your circumstances and the relevant factors, the Commissioner will exercise his discretion to extend the two-year period for the ownership interest in the property. You can claim the main residence exemption from capital gains tax for up to 2 hectares of the land that the dwelling is on. The 2 hectares you choose must include the land that is under the dwelling. Further information about the Commissioner's discretion can be found by searching ato.gov.au for 'QC 66057'.

This private ruling applies for the following period:

Period end 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

The late XX (the "deceased") and her then partner, and later spouse, purchased a property (the "Property") at XX in 19XX as joint tenants.

They both lived on the Property and worked it to produce income.

The Property is more than 2 hectares in size.

The deceased's spouse died in 20XX. At that time no steps were taken by the deceased or anyone on their behalf to transfer title to the Property out of joint names and into the deceased's sole name.

The deceased continued to reside in the cottage on the Property when poor health required them to move into a nursing home.

The deceased retained ownership of the Property but all commercial activity had ceased.

The deceased's niece, who held Power of Attorney, decided to sell the Property.

The niece arranged for a registration of Notice of Death on XX XX 20XX, thereby transferring title to the Property solely into the deceased's name.

A contract of sale was entered into which noted the vendor as the Deceased.

The proposed purchaser defaulted under the terms of the contract and lodged and registered a caveat against title to the Property, preventing further dealings.

The deceased passed away on XX XX 20XX without leaving a Will.

Person A was the only known surviving sibling causing difficulty in locating other siblings.

Person A made an Application for Letters of Administration to the Supreme Court, but it took several years to track down sufficient information to enable lodging of the application.

Instructions to apply for the Grant of Letters of Administration were received in 20XX but application for the grant was not able to be lodged with the Supreme Court until later in 20XX.

Administration was granted to Person A approximately two years later.

The Property remained dormant albeit with a caveat registered thereon.

No legal representative of the deceased had been appointed by the Court resulting in no person having legal authority to deal with the property.

Existing disputes were resolved and/or withdrawn.

Title of the interest in the Property passed to Person A in their capacity as Trustee/Administrator. Person A died before the Property was sold.

Soil contamination was discovered on the Property in 20XX. A Clean-Up Notice was issued but overall compliance was unable to be achieved by the Executors due to the high costs.

An Expert's Report and Remediation Action Plan were finalised two years after Person A's death.

The Property was placed on the market with full disclosure of the contamination and sold a few months later as part of the deceased's estate.

Settlement occurred three months later.

Following grant of probate of Person A's will, Person A's two children (and beneficiaries) were appointed as Executors and Trustees of the deceased's estate.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195

Income Tax Assessment Act 1997 section 118-200

Income Tax Assessment Act 1997 subsection 104-10(5)

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