Edited version of private advice

Authorisation Number: 1052345381819

Date of advice: 23 December 2024

Ruling

Subject: Commissioner's discretion - deceased estate

Question 1

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 1

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 periods:

Year ended 30 June 20XX

The scheme commenced on:

30 June 20XX

Relevant facts and circumstances

The deceased and their spouse acquired a property (property) as joint tenants prior to 20 September 1985.

The property was their main residence until their passing and has never been used for income producing purposes.

The property was situated on less than X hectares of land.

The deceased and their spouse had several children.

On XX/XX/20XX, one of the children passed away suddenly, leaving X dependent children.

During this time, the deceased's spouse was suffering from health issues, and the deceased was the primary carer within the home.

In XX/20XX, the deceased's spouse moved into full time residential care.

During 20XX, one of the beneficiaries who suffered from a disability moved into the property.

The deceased had received advice from a representative from a local law firm who regularly attended a support group that they attended. On XX/XX/20XX, the deceased proceeded to change the title of the property from joint tenants to tenants in common in equal shares. The deceased then redrafted their will to reflect the passing of their child.

The deceased passed away on XX/XX/20XX.

On XX/XX/20XX, probate was granted.

After the deceased's passing, their 50% ownership interest was transferred to the beneficiaries of their estate in accordance with their will, with the other 50% continuing to be owned by the deceased's spouse.

Although the beneficiary living in the property was not given a formal right to occupy the property, they were a beneficiary of the deceased's will and the remaining beneficiaries agreed that they could remain in the property until suitable living arrangements could be found. The beneficiary did not pay rent to live in the property. The remaining beneficiaries took into account that the deceased's spouse's health was declining and the deceased's spouse received comfort from the property being retained and the disabled beneficiary continuing to live there.

The deceased's spouse's health continued to decline and on XX/XX/20XX, they passed away.

Following the deceased's spouse's passing, probate of their will was granted to one of the beneficiaries who promptly assisted the beneficiary living in the property to locate suitable alternative accommodation. The disabled beneficiary paid a deposit to secure the alternative accommodation with the balance to be paid from funds received on settlement of the sale of the property.

Shortly thereafter, a real estate agency agreement was entered for the sale of the property.

A contract was entered to sell the property on XX/XX/20XX with settlement occurring on XX/XX/20XX.

The property remained the disabled beneficiary's main residence until its disposal.

Relevant legislative provisions

Income Tax Assessment Act 1997 subsection 118-195(1)

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