Edited version of private advice

Authorisation Number: 1052278122628

Date of advice: 4 September 2024

Ruling

Subject: Commissioner's discretion - deceased estate

Question

Will the Commissioner exercise the discretion to allow an extension of time for you to dispose of your ownership interest in the property and disregard the capital gain or capital loss you made on the disposal of the dwelling and up to 2 hectares of adjacent land?

Answer

Yes.

Having considered your circumstances and the relevant factors the Commissioner will allow an extension of time. However, the extension only extends to the dwelling and the land to the extent that the land was used primarily for private and domestic purposes in association with the dwelling, up to a maximum area of 2 hectares.

As such, you can apply the main residence exemption to whichever area of land you choose in addition to the land on which your dwelling is situated. However, subsection 118-120(3) of the ITAA 1997 specifies that the total of the land (including the land on which the dwelling is situated) must not exceed 2 hectares.

This ruling applies for the following period:

Year ended 30 June 20YY

The scheme commenced on:

DD MM YYYY

Relevant facts and circumstances

The deceased passed away on DD MM 20YY.

The dwelling is located at the property.

The deceased acquired the property on DD MM 20YY.

The property was never used to produce income and was the deceased's main residence from the date of purchase until their death.

The property is situated on more than 2 hectares of land.

The deceased left a Will dated DD MM 20YY appointing The Public Trustee (the executor) as their executor and trustee.

The deceased's children are named the beneficiaries under the Will.

The beneficiaries were unable to take action to dispose of the property due to their personal circumstances.

The second beneficiary lived overseas with their spouse and dependants as at the date of death.

In January 2020, the World Health Organization declared the coronavirus (COVID-19) outbreak a Public Health Emergency of International Concern.

In March 2020, Australia's borders were closed. Only Australian citizens, residents and immediate family members could travel to Australia.

On DD MM 20YY, the executor was authorised to administer the estate in accordance with the Will.

On DD MM 20YY, an Authority for Disposal of Realty form was signed by the beneficiaries to indicate their intention to dispose of the property.

Between DD MM 20YY and DD MM 20YY contact was made between the beneficiaries and the executor to attempt to organise the disposal of the property.

On DD MM 20YY, the beneficiaries lodged a complaint against the executor regarding the administration of the estate.

In February 2022, the Australian international boarders were opened conditionally.

On DD MM 20YY, the property title was transferred from the executor to the beneficiaries.

On DD MM 20YY, the beneficiaries received an email from the executor notifying them of the property title transfer.

Between DD and DD MM 20YY, the beneficiaries removed personal effects from the property.

On DD MM 20YY, a contract enlisting the services of the real estate agency was signed.

On DD MM 20YY, the property was listed for sale.

On DD MM 20YY, a contract to sell the property was entered into with settlement occurring on

DD MM 20YY.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).