Edited version of private advice

Authorisation Number: 1052362286266

Date of advice: 21 February 2025

Ruling

Subject: CGT - deceased estates

Question

Will the Commissioner exercise the discretion under section 118-195 of the Income Tax Assessment Act 1997 (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:

1 July 20XX

The scheme commenced on:

DD MM 20XX

Relevant facts and circumstances

Estate background

On DD MM 20XX, the deceased passed away.

At the date of death, the deceased owned a property.

On DD MM 20XX, the deceased acquired the property.

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 complexity of the estate

In MM 20XX, the deceased was cared for at their property by their youngest child. The care continued for 8 years until DD MM 20XX. The deceased fell ill and needed to be transferred to a XXXX ward.

On DD MM 20XX, the deceased relocated to the aged care facility.

In MM 20XX, the deceased passed away during the peak period of COVID-19.

On DD MM 20XX, a funeral was held for the deceased.

In MM 20XX, the deceased's children, and beneficiaries agreed that their sibling could live rent-free in the deceased's property for at least one year. The sibling would only be responsible for paying all body corporate fees and property expenses. This arrangement was made to allow the sibling time to adjust to life without caring for the deceased, find employment, and secure alternative accommodation after the easing of COVID-19 restrictions.

On DD MM 20XX, the beneficiaries of the deceased agreed once more that their sibling could stay at the property until it was sold, as they were struggling to find suitable and affordable accommodation.

In MM 20XX, the property was painted in preparation for the sale whilst the beneficiary's sibling temporarily stayed with friends.

On DD MM 20XX, you applied for Probate to the Court.

In MM 20XX, the property required further repairs and finishing touches.

Between DD MM 20XX and DD MM 20XX, your application for probate was delayed by a request for additional information from the Court. Specifically, they required a medical statutory declaration confirming that the deceased was of sound mind when they signed and executed their will. The deceased had spent the last X months at an aged care facility. However, no doctor who had treated the deceased was willing to provide a statutory declaration regarding their mental state.

In MM 20XX, after visiting multiple doctors and exhausting all avenues, you were unable to fulfill the Court's request for additional information. Consequently, you withdrew your application for probate, intending to engage lawyers as the process had become too difficult.

In MM 20XX, you engaged a lawyer to assist with applying for Letters of Administration to the Court. However, due to Christmas and the seasonal holidays, they were unable to process the request until MM 20XX.

On DD MM 20XX, your lawyer filed for Letters of Administration.

On DD MM 20XX, your Letters of Administration was delayed as the Court requested further information.

On DD MM 20XX, you were granted Probate for Letters of Administration.

In MM 20XX, final repairs and paint work were carried out on the property.

Sale of the property

On DD MM 20XX, you entered a contract for the sale of the property.

On DD MM 20XX, settlement of the property occurred.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195

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