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Edited version of private advice
Authorisation Number: 1052070014863
Date of advice: 9 January 2023
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 capital gains tax (CGT) exemption to dispose of the property?
Answer
Yes.
Having considered your circumstances and the relevant factors, the Commissioner will extend the two-year period to dispose of the dwelling. 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 commences on:
1 July 20XX
Relevant facts and circumstances
The deceased, passed away on XX XXXX 20XX.
Probate was granted on XX XXXXX 20XX.
Clause 3 of the will gave the rest and residue of their estate to their sibling.
The sibling passed away in XXX 20XX and clause 4.1 states that their relative was the sole beneficiary of the estate.
The Deceased lived in a property, and it was their main residence until their death.
The property was never used to produce income.
XXXXXX Pty Ltd (the Company) owned the property.
The deceased acquired shares in the Company which had legal ownership of the land on which the property was built.
The shares acquired by the deceased conferred the right to occupy the property. That is, by virtue of owning a set of shares in the Company, the deceased had the right to occupy the property.
The executors, rights were bound by the Trustee legislation and the executor was only able to communicate with the Strata corporation of Y.
Any messages had to be fed through from the Strata to the Board of Directors. This made things very difficult to get things done as an indirect entity.
During the Covid lockdown restrictions, a number of attempts were made to request the Board to issue the share certificate for the settlement of the property.
There were no responses for at least 6 months.
The share certificate was finally issued XX XXX 20XX.
A real-estate agent was found for the property as soon as the certificate was issued.
The property went to auction in XXXX 20XX, and settlement took place in XXXX 20XX.
You supplied us with a copy of the title search.
You supplied us with a copy of the agreement for sale of shares.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 118-195