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Edited version of private advice
Authorisation Number: 1052076208743
Date of advice: 10 January 2023
Ruling
Subject: CGT - deceased estate
Question
Will the Commissioner exercise the discretion under section 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997) to allow an extension of time for you to dispose of your ownership interest in the dwelling acquired from a 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:
Year ended 30 June 20XX
The scheme commences on:
01 July 20XX
Relevant facts and circumstances
The deceased passed away on in 20XX.
The deceased acquired the property after 20 September 1985.
The property was the main residence of the deceased and was not used to produce assessable income at that time.
The property was situated on less than two hectares of land.
The probate was granted.
The COVID-19 lockdown prevented beneficiaries from other council areas coming in to assist and having tradesman attend to the general maintenance needed to be carried out for sale purposes.
Restrictions on real estate activities due to COVID-19 lockdown also hindered the ability of the executor to list the property for sale.
With the easing of COVID-19 restrictions, the property was listed for sale.
After months of negotiation, an option agreement was negotiated and a Heads of Agreement to purchase the property was signed with the developer.
In June 20XX, the developer was dealing with unforeseen delays due to Covid-19 issues affecting workflow of consultants, architects and banks and further delays to obtaining Development Application (DA) approval from local city council.
In August 20XX, the executor was notified that the developer was seeking extension to the purchase option due to the delay in obtaining DA approval.
In April the following year, the developer was able to get a DA approved for the site and the option was exercised to purchase the property and the contracts for the sale of the property were exchanged.
The settlement on the property was completed more than 2 years after the date of death.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 118-195