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Edited version of private advice
Authorisation Number: 1052117366253
Date of advice: 6 June 2023
Ruling
Subject: Commissioner's discretion - deceased estate
Question
Will the Commissioner exercise the discretion under section 118-195 of the 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.
Repairs to the deceased's property that were undertaken to improve the condition it was in at the time of their death is not a factor favourable to exercising the Commissioner's discretion. However, the main cause of delay in the sale of the property was the caveat preventing the granting of probate which is a matter that was out of the executor's control. The executor's health issues also significantly contributed to the delay. Having considered all of the circumstances in their entirety 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 on XX XX 20XX.
The dwelling was the main residence of the deceased until they passed away.
The dwelling has never been used to produce assessable income.
The land area is less than 2 hectares in size.
The deceased's Will appointed Child A as the executor and trustee.
The deceased was survived by a number of children.
A dispute ensued in relation to the estate of the deceased. A caveat was lodged on behalf of Child B preventing any grant of probate issuing to the executor. The caveat was due to expire on XX XX 2XXX.
The dispute negotiations delayed the preparation of the dwelling for sale as the caveat lodged prevented any work being done on the dwelling or the personal possessions of the deceased being disposed of.
The dispute was finally resolved with a Deed of Family Arrangement entered into on XX XX 2XXX.
Subsequent to the lifting of the caveat and the granting of probate, the executor suffered a number of health issues which impaired their ability to attend the property to clean it and deal with the deceased's many possessions that they had accumulated.
The dwelling required a new water pump to make it habitable which took time to install and make operational.
The dwelling was sold with the contract signed on xx xx 20xx and settlement taking place on xx xx 20xx.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-195