Edited version of private advice

Authorisation Number: 1052121760805

Date of advice: 23 May 2023

Ruling

Subject: Commissioner's discretion - extension to the two-year time limit

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 the Administrator to dispose of the ownership interest in the dwelling owned as trustee of the deceased estate and disregard the capital gain or capital loss made on the disposal?

Answer

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 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

Parent 1 passed away leaving everything to Parent 2.

Parent 2 passed away.

The only Property they owned was the residence.

You were granted letters of administration as there was only a draft Will which had not been signed due to Parent 2 entering hospital.

Since the passing of Parent 2 you have been personally dealing with the maintenance of your parents' property in readiness for a sale. As it is a residence on less than 2 hectares of land and situated several hours drive from your home it was extremely difficult to maintain. Being such a remote location made it difficult to keep garden under control whilst removing personal effects.

This maintenance went on until the COVID and associated lock downs prevented anyone from accessing the property. A family member then became very sick. You had to spend an enormous amount of time assisting the sick family member and preparing legal documents. The sick family member passed away and as you were named executor of their Will, there was a lot of further paperwork to attend to. Probate is ongoing as the death and signing of the Will were close together.

Lockdown dates affected maintenance and any prospect of getting the Property ready for sale. In addition, the market was a bit flat towards the end of COVID.

Lockdown 1: X March 20XX - X May 20XX (X days) - Parent 2 passed away during this period.

Lockdown 2: X July 20XX - X October 20XX (X days)

Lockdown 3: X February 20XX - X February 20XX (X days)

Throughout 20XX, family members and you were planning how to prepare the Property ready for sale. You and the family members live in different locations which were not close to each other.

You were trying to prepare the Property for sale at the lowest cost which meant using what weekend time you could spare. Ultimately it was primarily you carrying out the majority of the work, with another family member helping you more this year.

You spent time dealing with probate and sale of the Property.

The Property has been unoccupied since Parent 2 passed, but from time-to-time a family member and you visited the Property and stayed there to maintain it.

The Property has now been sold and settlement has occurred.

The period of preparing the Property for sale has been littered with stress, distractions, lockdowns, further bereavement, and legal challenges, all preventing dealing with the sale.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 118-195