Edited version of private advice

Authorisation Number: 1052083154950

Date of advice: 2 February 2023

Ruling

Subject: Commissioner's discretion - deceased estate

Question

Will the Commissioner exercise his discretion under section 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the two-year period to dispose of the dwelling to the relevant date?

Answer

Yes. Having considered your circumstances and the relevant factors, the Commissioner will extend the two-year period to dispose of the dwelling to the relevant date. 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 commenced on:

1 July 20XX

Relevant facts and circumstances

The deceased passed away over a decade ago.

Probate was granted a few months after the date of death.

The main asset of the deceased was a share in a property.

The property was originally purchased by the deceased and their estranged spouse as tenants in common.

The property is less than 2 hectares.

Following the deceased death, their share of the property was inherited by their child.

The child has not resided at the property.

The deceased was not living in the property at the time of their death as they had left and moved to another location in a prior year.

Prior to their passing, the deceased and the applicant spoke about the property and the deceased expressed a wish that their spouse remain in the house until they wanted to sell it or they passed way.

No income was derived from the property throughout the whole period of ownership.

The spouse lived in the property as their main residence, paid no rent and covered all outgoings.

As the spouse was living in the property, it could not be sold until they were no longer able to care for themselves. The spouse moved into a nursing home several years after the date of death.

The choice to dispose of the property was not open to the applicant after the deceased had passed away and they were not able to access the property until after it was vacated by the spouse. The reluctance to make any adjustments to the status quo arose due to domestic violence and arson threats against the family should there be any attempts to sell the property.

The refusal of the spouse to sell is the sole reason for the delay in selling the property.

When the spouse moved into an aged care facility, they needed to sell the property to fund this.

After the spouse vacated the property, the applicant started cleaning out the property to get it ready for sale. Painting of the house also took place at the same time.

The property was listed for sale several months later and the contract was signed shortly after.

Settlement took place in the following month.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195