Edited version of private advice

Authorisation Number: 1051923001426

Date of advice: 17 November 2021

Ruling

Subject: Commissioner's discretion to extend the two-year time limit to dispose of an inherited house

Question

Will the Commissioner allow an extension of time for you to dispose of your ownership interest in the house and disregard the capital gain you make on the disposal?

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 66057' on ato.gov.au.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

At some time after 1985, the deceased inherited the house from a relative. The house was the deceased main residence until they passed away in mid-20XX.

The deceased's will bequeathed the rest and residue of the estate on trust to the deceased's child. The deceased was not the sole beneficiary of the trust. As specified in the will, upon determination of the trust the trustee is to pay the resultant funds in equal shares to three charities. Shortly after, the Trustee accepted the estate and were granted an order of administer by the Supreme Court.

In early 20XX, the discretionary trust was accepted, and management of the trust began. Shortly after, the deceased's child's trust officer advised that the deceased's child would like to move into the house. The trust officer further advised that they requested advice as to whether this was possible as the deceased's child was currently living in supported accommodation.

In late 20XX, the deceased's child's trust officer advised the Trustee that the deceased's child would be moving into aged care. Shortly after, the following events took place:

•                 the trust officer approved sale of the house to pay the Refundable Accommodation Deposit for the deceased's child to enter aged care.

•                 the Trustee sent a work order to a valuer to value the house to begin the process of getting the paperwork and house ready to sell.

•                 the Trustee received the valuation report from the valuer.

•                 the Trustee sent the valuation and 'Selling Authority' form to the trust officer to complete.

In early 20XX, the Trustee received 'Approval to Sell' and sent instructions to their legal team, and property team to prepare an inventory of furniture and effects and remove items to an auction clearing house. Shortly after, the following events took place:

•                 the house was cleared out

•                 the Trustee held an auction for the house items

•                 the Trustee's property team booked the auction date for the sale of the house

In mid-20XX, the house sold at auction and settled less than two months after the two-year period expired.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subdivision 115-A

Income Tax Assessment Act 1997 section 102-20

Income Tax Assessment Act 1997 section 104-10

Income Tax Assessment Act 1997 section 118-120

Income Tax Assessment Act 1997 section 118-130

Income Tax Assessment Act 1997 section 118-195