Edited version of private advice

Authorisation Number: 1052225006717

Date of advice: 22 February 2024

Ruling

Subject: CGT - deceased estate

Question

Will the Commissioner exercise the discretion under section 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997) to allow an extension of time to dispose of the ownership interest in the property (the Property) and disregard the capital gain 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 several years ago.

The property was the main residence of the deceased.

The property was purchased by the deceased a number of years ago.

The property was less than 2 hectares.

The property was never used to produce income.

The property settled in a previous year.

The reasons for the delay in selling are as follows:

There was inaction by the original executor who eventually surrendered the role as executor.

The original executor allowed the estate to fall into arears in terms of rates loans etc.

The original executor surrendered their role a couple of years after the date of death.

The original executor took legal action against the estate and attempted to lodge a caveat over the estate which was denied.

The deceased's child attempted to replace the original executor without success a few months after the date of death.

The deceased's child was successful in obtaining administration from the court in the year that the original executor surrendered their role.

The child then needed to work out what needed doing with the estate.

Shortly after surrendering their role as executor, the original executor attempted to make a claim on the estate which was denied.

The former executor attempts legal action again a short time after the first attempt.

The child then meets with the real estate agent to look at putting all the properties on the market.

Debts needed to be collected from tenants.

The child makes contact with the bank to try and find out what is owing.

This dealing with the banks took a long time as title location was required and the title of the main residence was lost and needed to be reissued.

The child's lawyers were assisting throughout with letters.

The property needed to be refinanced which took a long time.

The deceased's child moved into the property a few years after the date of death so they could do repairs themselves as there was no money in the estate.

The property needed repairs done before it could be sold; these related to neglect by the deceased and storm damage following death.

The repairs consisted of:

•         Damaged floors, walls, curtains, windows & gates.

•         Water damage that was still ongoing.

•         Alarm system was fried.

•         A lot of electrical parts in the house were not operational.

•         No smoke detectors and only 1 RCD.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195

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