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Edited version of private advice
Authorisation Number: 1052092309830
Date of advice: 28 February 2023
Ruling
Subject: Commissioner's discretion - deceased estate
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 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 private ruling applies for the following period
Year ending 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts
The deceased passed away after 20 September 1985.
The deceased inherited an ownership interest in a dwelling from their spouse after 20 September 1985. (The property)
The dwelling was the main residence of the deceased for a number of years prior to their death. They resided at an aged care facility for a number of years prior to their passing.
The dwelling has never been used to produce assessable income.
The land area is less than 2 hectares in size.
The deceased's Will provided their child, (child A) a right to reside in the property during their lifetime or for as long as they wish to occupy it, then when the property is sold, the net proceeds are to be divided between the deceased's four children.
In or around XX XX 20XX, Child A agreed for the property to be sold and the right to occupy the property be terminated.
On XX XX 20XX the executor and Child A attended a legal representative to discuss the administration of the deceased estate and sale of the property.
The executor had not previously obtained probate on the will and therefore was required to make an application for probate in order to sell the property.
The deceased's death certificate was also issued with a spelling error in their name and had to be rectified with births, deaths and marriages. This took several months to rectify. This was attended to around XX XX 20XX.
On XX XX 20XX the executor's application for Probate was posted to the Supreme Court for Probate.
The property was listed for sale shortly after and a contract for the sale and purchase of the property was executed on XX XX 20XX.
Probate was granted to the executor on XX XX 20XX.
Settlement took place on XX XX 20XX.
Child A continuously occupied the property up until and including the settlement date of the sale of the property.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-195
Income Tax Assessment Act 1997 subsection 118-120(3)