Edited version of private advice

Authorisation Number: 1052083361326

Date of advice: 3 February 2023

Ruling

Subject: Commissioner's discretion - deceased estates

Question

Will the Commissioner exercise the discretion under section 118-195 of 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 20YY

The scheme commenced on:

XX October 20XX

Relevant facts and circumstances

The deceased passed away on XX December 20YY.

The dwelling is located at a Place (the property).

The deceased acquired the property after 20 September 1985.

The property was the main residence of the deceased just before he passed away and was not used to produce assessable income at that time.

The property was situated on XX hectares of land.

Probate was granted on XX July 20YY.

Legal action was taken challenging the deceased's Will by the Plaintiff.

The Executor and his lawyer first received correspondence from the Plaintiff's lawyer on XX March 20YY whereby they claimed to be the sole or principal beneficiary of the deceased's estate.

The Plaintiff interfered with efforts to obtain the original Will from the Bank which delayed probate being issued and also carried out various actions which contributed to further delays.

The Plaintiff initiated court proceedings which led to a hearing in the Supreme Court on XX December 20YY. On XX February 20YY the judge handed down his decision being the Plaintiff's Summons be dismissed.

Following the court decision, the Executor was able to undertake the distribution of the deceased's household goods which included numerous artworks and artist equipment including an etching printing press and screen printing equipment. The sale of these items took some time due the specialised nature of the equipment.

In undertaking this work, the Executor was constrained in that he lived a few hours drive from the property and personal health issues meant that he was usually not able to undertake the drive himself but relied on others, or he travelled by train or coach to the property.

In Mid-20YY it became necessary to replace a major component of the solar power system, the property being off-grid.

Due to the property being in a very small town with no real estate agent, advice regarding the best way to sell the property was sought from the deceased's close friend and long-time resident of the area. They advised that there would be interest in buying from the local area. The Executor and the Beneficiary of the Will agreed that private sale options would be pursued in the first instance.

There were several interested buyers and a contract was entered on XX October 20YY with settlement occurring on XX December 20YY.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subsection 118-195