Edited version of private advice

Authorisation Number: 1052073297415

Date of advice: 21 December 2022

Ruling

Subject: Commissioner's discretion - deceased estates

Question

Will the Commissioner exercise the discretion under section 118-195 of the Income Tax Assessment Act 1997 to allow an extension of time for you to dispose of your ownership interest in the dwelling you owned as trustee of the deceased estate and disregard the capital gain or capital loss you made on the disposal?

Answer

Yes.

Having considered your 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 ato.gov.au for 'QC 66057'.

This ruling applies for the following period:

The year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

The deceased passed away on DD/MM/YYYY.

The deceased acquired the dwelling on the property (the property) jointly with their spouse before 20 September 1985.

The property was situated on less than two hectares of land.

The deceased's spouse passed away some time ago, and the deceased acquired their ownership interest in the property through survivorship.

The deceased resided in the property until a few years before their death, at such time they moved into a nursing home.

The property was the main residence of the deceased and their spouse and was not used to produce income during their respective ownership periods.

The deceased continued to treat the property as their main residence from the date they moved into the nursing home until their date of death.

Probate of the deceased's will and codicils was granted to the executors soon after the deceased's death.

A severe weather event occurred within a year of the deceased's death, causing major damage to the property.

It took over a year for the executors to resolve the damage to the property through the property's insurer.

Only repairs were undertaken by the property's insurer, and no renovations or improvements were undertaken by the executors.

After the property was repaired, the property's insurer required that the deceased's goods and chattels be restored into the property.

Further delays to the property's sale were experienced while waiting for the beneficiaries to agree upon the distribution of good and chattels from the deceased's estate.

One of the executors chose to renounce their position, resulting in a subsequent grant of probate of the deceased's will and codicils being made.

After the deceased's goods and chattels were distributed to beneficiaries from the property, the property was listed for sale as soon as practically possible.

The property's sale was actively managed to settlement, which included various changes to the property's marketing strategy and price adjustments being made.

COVID-19 restrictions prevented the property's purchasers from viewing the property for a period of time.

A contract for the sale of the property was entered into on DD/MM/YYYY with settlement occurring on DD/MM/YYYY.

The property was not used to produce income from the deceased's date of death until settlement.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195