Edited version of private advice

Authorisation Number: 1052110286756

Date of advice: 24 April 2023

Ruling

Subject: Commissioner's discretion - deceased estate

Question

Will the Commissioner exercise the discretion under section 118-195 of Income Tax Assessment Act 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:

XX/XX/20XX

Relevant facts and circumstances

The deceased acquired their share of the property on XX/XX/20XX.

The property was their main residence up until they passed away on XX/XX/20XX.

At their date of death, the deceased owned XX% of the property as tenant in common with one of their adult children and their spouse, Person A and Person B, who each owned XX% of the property.

For the time the deceased owned their share of the property it was not producing income.

The property is less the 2 hectares.

The deceased's will stated that XX% of their estate (the estate being XX% of the property) should be left to Person A and XX% should be split between Person A's two children Person C and Person D if they live to be 21 years old.

Persons A, B, C and D all reside in the property and have done so since it was originally purchased.

On XX/XX/20XX a family provision application (FPA) was lodged with the court by the deceased's other adult child, Person E.

On XX/XX/20XX a deed of settlement was agreed to, which gave Person E $XX from the estate in return for Person E filing a notice of discontinuance of the FPA claim within 14 days of the date of the deed. This removed the blocker allowing the estate to deal with the estate's ownership interest in the property.

The executor and Person A agreed for the children's share of the property to be transferred to Person A in exchange for Person A paying the estate an amount equal to $XXX,XXX (being the value of the shares of the property due to the children under the will). That is, Person A effectively purchased this portion of the property from the estate. The amount paid to the estate is to be held by the trustee in equal shares provided each beneficiary attains the age of 21 and otherwise to the surviving beneficiary absolutely. On XX/XX/20XX an instrument of appropriation was entered into to transfer the children's share of the estate's property to Person A.

On XX/XX/20XX the instrument of appropriation was settled.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195