Edited version of private advice

Authorisation Number: 1051973700565

Date of advice: 29 April 2022

Ruling

Subject: Commissioner's discretion - deceased estate

Question 1

Will the Commissioner exercise his discretion under subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the two-year period to dispose of the dwelling for up to 2 hectares?

Answer

Yes, having considered your circumstances and the relevant factors, the Commissioner will allow an extension of time to dispose of the dwelling for up to 2 hectares. Further information about this discretion can be found by entering 'QC 23846' into the search bar at ato.gov.au

This private ruling applies for the following period:

Year ended 30 June 20XX.

The scheme commences on:

1 July 20XX.

Relevant facts and circumstances

You purchased the property after 20 September 1985 (the Property).

The property was a vacant block of land.

You resided in a caravan on the vacant land with a little shack on the property (the Dwelling).

Some time ago you passed away (the Deceased).

The Dwelling was the Deceased's main residence at the time of their death.

The Dwelling was not used for income producing activities and no income has been received from the Dwelling after the passing of the Deceased.

Under clause 2 of the Will, the Public Trustees were appointed the sole executor and trustee of the Deceased's estate.

Under clause 8 of the Will, the Deceased's partner was given a right to reside in the Dwelling until the Deceased's child reaches the age of XX.

Shortly after the Deceased passed away probate was granted.

Approximately seven years after the Deceased passed away the Deceased's child turned XX years of age.

The right to reside ceased.

The Deceased's partner moved out of the Dwelling at this point and did not inform the Public Trustee.

Under clause 8 of the Will, on termination of the right to reside, the Deceased's child, the Deceased's partner, and the Deceased's partners two children were to inherit the Dwelling (the beneficiaries).

The Public Trustee then had difficulty locating the beneficiaries in order to receive instructions on what they wished to do with the Dwelling.

The Public Trustee re-established communication with the beneficiaries.

Once communication was re-established, the beneficiaries were unable to agree on what to do with the Dwelling.

The Deceased's child communicated her wish to sell the Dwelling to the Public Trustee.

The Deceased's partner, and the Deceased's partners two children communicated their wish to have the Dwelling transferred to them to the Public Trustee.

A short time later the Deceased's partner sends a letter to the Public Trustee stating that they are unwilling to spend the money required to purchase The Deceased's child share of the Dwelling and pay out amounts owing on rates.

Six months after the Deceased's partner sends a letter to the Public Trustee the:

•         Deceased's partners two children communicated their wish to have the Dwelling sold: and the

•         Deceased's partner communicated their wish to have the Dwelling sold.

Six months later the Deceased's child confirmed their wish to have the Dwelling sold.

The Dwelling was listed for sale.

A short time after the Dwelling was listed for sale the Dwelling was sold.

Approximately 2 years and six months after the right to reside ceased settlement occurred on the Dwelling.

The Public Trustee understands there is capital gains tax for remaining XX ha of land.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 104-10

Income Tax Assessment Act 1997 section 118-130

Income Tax Assessment Act 1997 section 118-195