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Edited version of private advice
Authorisation Number: 1052270549590
Date of advice: 5 July 2024
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 their initial 50% share of the property before 20 September 1985, and inherited the remaining 50% share after 20 September 1985.
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.
The property was situated on less than two hectares of land.
The deceased passed away with two executors -Child A and Child B.
In MM 20YY Child A was admitted to a medical facility following a health concern. It was the determination of their medical practitioner that care for a set amount of time would be required. Following their release from care, it was the advice of their medical practitioner that they should not be responsible for any financial decisions for a set amount of time until they had fully recovered.
Probate was applied for after this waiting period had ended.
In MM 20YY, communications between Child A and Child B ceased - as such, this prevented any progress in selling the property.
In MM 20YY an initial sales plan was drafted by Child B for consideration by Child A.
In MM 20YY Child A was readmitted into hospital.
In MM 20YY a mediator was engaged to prepare planning documents for sale of the property. Lawyers were also engaged for communication between the two parties.
In MM 20YY, meetings between the two parties were held to discuss selling the property.
In MM 20YY a secondary sales plan was prepared to be discussed between the beneficiaries with their respective lawyers.
On DD MM 20YY Child A was readmitted to hospital. This was followed by discussions with lawyers on financial administration, and communications with real estate agents through lawyers.
Shortly after their hospital readmission, an application commenced to remove Child A as an executor. The property was placed on the marker shortly after.
The contract to sell the property was entered into on DD MM 20YY, with settlement occurring on DD MM 20YY.
The property has not been used to generate assessable income at any point between the date the deceased passed away and when the property was sold.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-195
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