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Edited version of private advice
Authorisation Number: 1052324014224
Date of advice: 29 October 2024
Ruling
Subject: CGT - deceased estate 2 year discretion
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 ending 30 June XXXX
The scheme commenced on:
XX/XX/XXXX
Relevant facts and circumstances
On XX/XX/XXXX the deceased passed away.
Deceased died intestate, due to a very aggressive terminal illness.
The property address is XXXX.
The deceased purchased the property post-CGT.
The size of the property is less than 2 hectares.
The property was the main residence of the deceased prior to their death.
Deceased resided at the property with Y, one of their adult children.
Y has continued to reside at the property after the death of the deceased and this property was their principal place of residence.
Y is also a beneficiary to the property.
The deceased tried to make a will once they became ill but their ability to prepare the will was severely compromised due to the aggressive nature of their terminal illness and COVID-19 restrictions while they were in hospital.
However, the deceased was able to provide oral instruction to their other adult children.
As a dying wish the deceased wanted Y to be allowed to reside in their property for an additional period, so that they had reasonable time to get on their feet.
On XX/XX/XXXX the Letters of Administration were granted.
The agreement to let Y stay at the property was included in a Deed of Acknowledgement.
On XX/XX/XXXX the certificate of title to the property was transferred to the trustee.
On XX/XX/XXXX the beneficiaries agreed to prepare the property for sale, with the expectation of selling the property within the 2-year period from the deceased's death.
On XX/XX/XXXX Y suffered a severe injury and sought medical treatment. As a result, their ability to move to an alternate dwelling was compromised.
On XX/XX/XXXX the beneficiaries signed the selling agency agreement.
On XX/XX/XXXX marketing commenced and the first open home took place.
On XX/XX/XXXX the second open home took place.
On XX/XX/XXXX a written offer was received for the purchase of the property.
On XX/XX/XXXX the written offer was accepted and a contract entered into.
On XX/XX/XXXX the settlement for the sale of the property took place, being less than 3 months after the expiry of the 2-year period from the deceased's death.
The property was never used for income producing purposes.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-195.
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