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Edited version of private advice
Authorisation Number: 1052413707545
Date of advice: 1 July 2025
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 (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'.
Question 2
Will the Commissioner exercise the discretion under section 118-195 of the ITAA 1997 to allow an extension of time for the disposal of XX%, of your ownership interest in the Property, to Person C 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 periods:
Year ended DD/MM/20YY
Year ended DD/MM/20YY
Year ended DD/MM/20YY
Year ended DD/MM/20YY
The scheme commenced on:
DD/MM/20YY
Relevant facts and circumstances
On DD/MM/20YY, the Deceased passed away, leaving a Will.
At date of death, the Deceased owned a Property at XXX which was their main residence and was not used to produce income.
The Will appointed Person A and Person B as executors and trustees. Person A and Person B were also the only beneficiaries in equal shares.
Person B disagreed with the validity of the Will and felt they should have sole control of administering the estate, and these issues could not be resolved between Person B and Person A.
In MM/20YY, Person B commenced proceedings in the Supreme Court contesting the Will.
On DD/MM/20YY, after Court appointed mediation, consent orders were made by the Court that:
• an independent administrator would be appointed, with each party to pay their costs; and
• the estate would be split equally between Person A and Person B with Person A to receive on account of their entitlement to the residuary estate an absolute devise, unencumbered, of the Deceased's realty at XXX.
On DD/MM/20YY, letters of administration were granted to Person D.
The Deceased was a hoarder, to the point where every room in the house was filled with items and rubbish, some up to the ceiling. A double garage and outdoor shed were also full of rubbish.
The house was infested with vermin and there was significant rot.
During the COVID period, it was difficult to engage professional cleaners, with lockdowns also limiting the time Person A and Person C could spend on the Property clean up.
On DD/MM/20YY, the independent administrator lodged a transmission application with land registry services for the transfer of the Property to Person A.
In MM/20YY, Person A and Person C's own property was damaged due to flooding in the area and required a significant clean up and repair, meaning they could not devote time to the Deceased's Property.
On or around MM/20YY the Property was transferred to Person A as a beneficiary.
On DD/MM/20YY, Person A transferred a half share of the Property to Person C.
Shortly after and having not been able to find cleaners prepared to do this work in the COVID 19 restricted environment, Person A and Person C began removing rubbish from the residence to make it habitable, so that it could be sold.
In MM/20YY, as a result of working on clearing the residence, Person A suffered an injury that required emergency surgery. The recovery period meant that Person A was unable to return to clearing the Property until MM/20YY.
In MM/20YY, the Property was listed for sale with Real Estate Company A.
The Property was still in poor condition, and whilst remedial works were being completed, was exposed to the market through signage stating it would be on the market shortly.
Subsequently, professional photography and videography services formed part of the marketing mix and social media promotion.
After several months, Person A suggested the agent change the marketing campaign and look to sell the Property by auction. The agent tried to dissuade Person A, and Person A became frustrated that the agent failed to provide feedback of any open house inspections or enquires.
A similar property situated close by remained unsold over the same period.
On DD/MM/20YY, and after no offers on the Property, Person A gave the agent the required days' notice to terminate the agreement between them.
Person A then engaged Real Estate Company B as the selling agent.
On DD/MM/20YY, the Property was sold at auction.
A condition of the sale insisted on by the purchaser, was an extended settlement. With the difficulty they had selling the Property, Person A agreed to this condition to achieve the sale.
In MM/20YY, settlement occurred.
The Property is less than 2 hectares
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-195
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