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Edited version of private advice
Authorisation Number: 1051774028020
Date of advice: 28 October 2020
Ruling
Subject: Deceased estate - Commissioner's discretion to extend to the two year period - main residence exemption
Question
Will the Commissioner exercise his discretion under subsection 118-195(1) of the Income Tax Assessment Act 1997(ITAA 1997) and allow an extension of time to the two year period untilsettlement?
Answer
Yes. Having considered your circumstances and the relevant factors, the Commissioner will allow an extension of time. Further information about this discretion can be found by searching 'QC 52250' on ato.gov.au
This ruling applies for the following periods:
Year ended 30 June 2020
Year ending 30 June 2021
The scheme commences on:
1 July 2017
Relevant facts and circumstances
The deceased acquired the property prior to 20 September 1985. The deceased passed away in the 2018.
The co-executors of the deceased's estate were the deceased's adult children.
The property was held by the Trustees of the Estate from the date of death until its eventual sale in the 2021 financial year.
In the 2018 financial year a dispute arose between the beneficiaries as to the conditions of the will and entitlement to the dwelling. Negotiations continued for several months. The beneficiaries' dispute was settled in the 2019 financial year and final terms of the will were agreed to.
The deceased's death certificate was misplaced by the co-executor's legal representatives in August 20XX. A new death certificate was received a few months later.
Probate was granted in February 20XX.
In April, the House insurance of the Estate was transferred into the name of one of the co-executor's name solely. This was rectified by the co-executor's legal representatives.
In May all remaining belongings were retrieved from the property, but further cleaning and rubbish removal was required.
In August a new real estate agency was appointed to oversee the sale of the property. The property was in saleable condition.
The property was first listed for sale in October 20XX.
In March 20XX the real estate agency controlling the sale of the property was replaced due to the failure to sell the property.
The new real estate agency reduced the property's selling price accordingly.
An offer subject to finance was received in April 20XX and was rejected.
A revised offer was received soon after and was accepted. A final sale price was agreed upon following a building inspection and advice from legal representatives.
The property was sold in May 20XX and settled in the following income year
The delay in selling the property was due to challenges to the will and ownership of the dwelling, in addition to administrative delays outside the control of the will's executors.
Relevant legislative provisions
Income Tax Assessment Act 1997 subsection 118-130(3).
Income Tax Assessment Act 1997 section 118-195.
Income Tax Assessment Act 1997 subsection 118-195(1).