Edited version of private advice

Authorisation Number: 1051945812247

Date of advice: 4 February 2022

Ruling

Subject: Commissioner's discretion - deceased estate

Question

Will the Commissioner allow an extension of time under subsection 118-195(1) of the Income Tax Assessment Act 1997 so that the capital gain or loss made on the disposal of the Property is disregarded?

Answer

Yes.

Having considered the present 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 'QC 66057' on ato.gov.au

This ruling applies for the following period:

Year ended 30 June 20xx

The scheme commences on:

1 July 20xx

Relevant facts and circumstances

Z and W jointly purchased the Property more than XX years ago. The Property is less than two hectares in area.

Z and W occupied the Property at all times as their main residence until their respective deaths.

On xx/xx/xxxx, W passed away from an aggressive illness after only being diagnosed x months earlier. W's Will named Z as the executor of W's estate.

Z, after losing their spouse of many decades, was in a state of mourning, and did not immediately commence the administration of W's estate.

A few months after W's death, Z became suddenly ill, requiring admission to hospital. On xx/xx/xxxx, x days after Z's admission to hospital, Z passed away.

Probate for Z's Will was granted on xx/xx/xxxx.

Z's Will appointed Z's two adult children, Y and U as co-executors of Z's estate.

With Z being unable to complete the administration of W's estate before Z's, the executors were left with the additional task, and added complexity, of having to administer both W's and Z's estates concurrently.

Z and W's sudden deaths within a short period of time of each other meant that their personal and financial affairs were not entirely in order and complicated the administration of their respective estates.

There were also other matters which complicated the administration of the estates.

This resulted in a delay in the sale of the Property.

Two years and x months after the death of Z, the executors signed a contract selling the Property on behalf of Z's estate. Settlement occurred on xx/xx/xxxx.

During the period from Z's death to when the Property was sold, it remained unoccupied and was not used for income earning purposes. Also, the Property was not used for income earning purposes before Z's death.

Relevant legislative provisions

Income Tax Assessment Act 1997 subsection 118-195(1)