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Edited version of private advice
Authorisation Number: 1052175093173
Date of advice: 2 October 2023
Ruling
Subject: Commissioner's discretion - deceased estate
Question
Will the Commissioner exercise the discretion under section 118-195 of the Income Tax Assessment Act 1997 to allow an extension of time for you to dispose of your ownership interest in the dwelling 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
The deceased passed away on DD MM 20YY.
The dwelling is located at XXXX (the property).
The deceased acquired the property before 20 September 1985.
The property was the main residence of the deceased just before they passed away and was not used to produce income at that time.
The property was situated on less than two hectares of land.
Prior to the deceased passing away, one of their children (Child A) resided at the property with them acting as their full-time carer. Although Child A did not have a right to occupy from the deceased's will, they believed that they were entitled to do so. The executors investigated this and determined that they were not entitled to continue residing there. However, they had concerns about evicting Child A without them first having access to alternative accommodation as they were elderly, unemployed and had developed mental health issues on the passing of the deceased as they had acted as their carer. The family feared that they would become homeless which would have exacerbated their mental health issues. It took a considerable time to relocate Child A from the property.
Another child of the deceased (Child B) had also left many personal items at the property, for which they had no place of their own to store these items. They believed that they were entitled to use the property. The executors had to convince them to move the items and then it took some time for them to do so given the sheer number of items. Child B was also going through a marital separation at the time. It took until close to settlement of the property to remove these items.
You entered into a contract to sell the property within the 2 year period and settlement occurred less than 2 weeks after the expiry of the 2 year period.
The property was not used to produce income after the deceased passed away.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-195
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