Edited version of private advice

Authorisation Number: 1052262973959

Date of advice: 19 June 2024

Ruling

Subject: Commissioner's discretion - deceased estate

Question

Will the Commissioner exercise the discretion under section 118-195 of ITAA 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 20YY

The scheme commenced on:

1 July 20YY

Relevant facts and circumstances

The deceased inherited the property upon the death of their relative on DD MM 19YY.

The property is at XXXX address.

The property is less than 2 hectares in size.

The deceased was the sole occupant and resided at the property since they were X years old.

The property was more than XX years old and had a heritage overlay.

On DD MM 20YY, the deceased was admitted into permanent care at X facility.

The deceased continued to regard the property as their main residence whilst in X facility. The deceased expressed their wish to always return to their home. They had wished that they would recover after being admitted to X facility. All their personal belongings remained in the home.

The deceased did not use the property to produce assessable income and it remained the main residence of the deceased at all material times.

On DD MM 20YY, the deceased died leaving their interest in the property as the only real property in their deceased Estate.

The property was held under the old Chains of Title system and was converted to the current Torrens system without a survey on DD MM 20YY when the transmission application was registered in the Legal Personal Representatives (the Applicant) name.

After the death of the deceased, the Applicant in their capacity as Executor promptly proceeded to apply for Probate which was granted on DD MM 20YY. The Applicant commenced with the Administration of the estate immediately which included the collection of all funds and the sale of the property.

The Applicant had to prepare the property for sale which took several months, the property was put on the market within the 2-year period from date of death in MM 20YY. A purchaser could not be secured within the two-year period from date of death.

As part of the Applicant's responsibilities as Executor, the Applicant proceeded to clear the deceased's belongings so that vacant possession could be given to the purchaser at settlement.

The Applicant had to seek assistance of family members in the removal of items from the property.

The property was in a state of disrepair. Works on the property commenced from date of death until settlement.

The deceased, had over the years, a collection of gardening, painting, mechanical tools and equipment that needed to be disposed of.

The Applicant and Estate Agent could not access the property due to COVID-19 restrictions in CITY X.

On DD MM 20YY, the Applicant entered a sale contract with a third-party purchaser who sought a long settlement.

Issues arose regarding the boundary of the property on DD MM 20YY, which was resolved on DD MM 20YY.

The property settled on DD MM 20YY.

There was therefore a total period of XX calendar days between the date probate was granted (DD MM 20YY) and entering a sale contract (DD MM 20YY). XX of those days were in COVID-19 lockdowns.

Actions taken in the remaining XX days between probate and contract of sale are as follows:

•         From DD MM 20YY to DD MM 20YY, the Applicant, relatives and family friends assisted in removing as much material as they could from the property.

•         On DD MM 20YY, approximately X tonnes (a X load) of material was collected by Company A and the estate was invoiced $X.

•         On DD MM 20YY, Company A collected approximately X tonnes of material (a X load). The estate was invoiced $X.

•         On DD MM 20YY, Company A collected a X load of material and invoiced the estate $X.

•         On DD MM 20YY, Company A collected approximately X tonnes (a X load) of material and invoiced the estate $X.

Further material was collected after the sale contract was entered into:

•         On DD MM 20YY, Company A collected a X load and invoiced the estate $X.

•         On DD MM 20YY, Company A collected approximately X tonnes (a X load) of material and invoiced the estate $X.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195

Income Tax Assessment Act 1997 subsection 118-120(3)

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