Edited version of private advice

Authorisation Number: 1052042186112

Date of advice: 17 October 2022

Ruling

Subject: Commissioner's discretion - deceased estate

Question

Will the Commissioner exercise discretion to extend the 2-year period for the Trustee to dispose of the Property under section 118-195 of the Income Tax Assessment Act 1997?

Answer

Yes.

This ruling applies for the following period:

1 July 20xx - 30 June 20xx

The scheme commences on:

1 July 20xx

Relevant facts and circumstances

The deceased passed away on xx/xx/xxxx.

The deceased acquired a property more than 50 years ago (Property).

The Property was the main residence of the deceased throughout the ownership period.

The property has never been used to produce assessable income.

Probate was granted on xx/xx/xxxx to the executor and trustee of the estate (Trustee)

At the time probate was granted COVID-19 restrictions were in place which caused significant delays to the Trustee in arranging for cleaning and removing family possessions that had accumulated for more than 50 years.

Soon after COVID-19 lockdown restrictions started easing, the Property was cleared and listed on the market.

Contract to sell the Property was entered into on xx/xx/xxxx. However, settlement occurred on xx/xx/xxxx, outside the 2-year period from the date of death.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-130

Income Tax Assessment Act 1997 section 118-195

Reasons for decision

As the sale of the Property could not be settled within 2 years of the death due to reasons beyond the Trustee's control that existed for a significant portion of the first two years, the Commissioner will allow an extension of the 2-year period for the purpose of item 2 in the table under subsection 118-195(1) of the Income Tax Assessment Act 1997.

The Trustees can disregard the capital gain from the sale of the Property.