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Edited version of private advice
Authorisation Number: 1051954869341
Date of advice: 1 March 2022
Ruling
Subject: Commissioner's discretion - two-year time limit - inherited property
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 ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
At some time before 1985, the deceased's spouse bought property (the house) on land of less than two hectares.
At some time after 1985, the deceased's spouse passed away. The deceased inherited the house. It was the deceased's main residence until they moved to aged care. The deceased chose to treat the house as their main residence after they moved out.
Several years later, the deceased passed away. Their will provided their child the right to use and occupy the house as their principal residence during their lifetime (the life interest).
The deceased's child lived in the house with the deceased and continued to live there after the deceased passed away until the deceased's child moved to aged care.
About a year later, the deceased's child passed away intestate. A state trustee was appointed the Administrator of their estate. The Administrator obtained a copy of the title of the house and noticed it was still in the deceased's name. The Administrator investigated if the deceased's child had an interest in the deceased's estate. The Administrator contacted the deceased's lawyers to seek clarity on the interpretation of the deceased's will to determine the deceased's child's interest in the estate. This process took about a year and involved several lawyers.
It was deemed the deceased's child was not entitled to any interest in the deceased's estate.
The executor of the deceased's estate provided authority to the Administrator to take over the administration of the deceased's estate.
Shortly after, the Administrator was granted probate and commenced marketing the house for sale.
The Administrator engaged a valuer to obtain a market valuation of the house.
Shortly after, the house sold and settled.
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