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Edited version of private advice
Authorisation Number: 1052380097276
Date of advice: 11 April 2025
Ruling
Subject: CGT - deceased estate
Question 1
Will the Commissioner exercise his 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.
This ruling applies for the following period:
Year ending 20XX.
The scheme commenced on:
XX XXX 20XX.
Relevant facts and circumstances
The property is located at Address A.
The property is on less than 2 hectares.
Person A, (the deceased) acquired the property as sole proprietor on XX XXX 19XX, on the passing of their mother.
The property was the main residence of the deceased for their lifetime.
On XX XXX 20XX the deceased passed away.
The will of the deceased named their children Person B and Person C as trustees of the estate, along with Person E
Person E renounced probate leaving Person B and Person C as trustees.
The entire estate was left to Person B and Person C, and the deceased's other child Person D, as equal beneficiaries.
Person D was born with a medical condition and resided at the property with their parents for their lifetime.
The will provided that the trustees shall hold Person D's one-third share of the estate in trust and shall invest and manage it for their benefit, which included investing in property for their occupation.
Under another clause of the will, the trustees were to hold Person D's share of the property in trust for their benefit and under this clause they allowed Person D to reside in the property due to their medical condition.
Person D remained at the property for a number of years following the passing of the deceased.
Person D's condition is complex and impacts their normal way of living.
A report by their treating psychologist identified that Person D does not deal well with stress or change and needs routine and familiarity.
Person D's NDIS provider was situated at the top of the street where they lived, and their support workers were also close by.
Neighbours as well as family supported Person D.
Person C visited Person D at home weekly.
Person B lived on the far north coast of State A but would come and stay each school holiday.
Person B and Person C had regular conversations with Person D about moving from the property, but these conversations resulted in anxiety for Person D, and complex behavioural and emotional outcomes for them.
In late 20XX Person B took Person D on a holiday where they rented an apartment for the stay. Person D expressed interest in living in an apartment close to their extended family.
In XXX 20XX a suitable apartment was located for Person D and was subsequently purchased.
On XX XXX 20XX Person D moved into the apartment, vacating the property at Address A.
On XX XXX 20XX the property went to auction.
On XX XXX 20XX the property sold with settlement taking place on XX XXX 20XX.
No capital improvements were made to the property from the date of the deceased's passing up to the date of sale.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-195(1)
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