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Edited version of private advice
Authorisation Number: 1052127270497
Date of advice: 9 June 2023
Ruling
Subject: Commissioner's discretion - deceased estates
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 up to 2 hectares (the Main Residence) and disregard the capital gain or capital loss you made on the disposal?
Answer
Yes.
Having considered your complex 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:
Financial year ending XX//XX/20YY
The scheme commenced on:
XX/XX/20YY
Relevant facts and circumstances
The Deceased passed away on XX/XX/20YY.
As at the date of death, the Deceased owned other properties (the Properties) and the Main Residence.
The Main Residence had been acquired by the Deceased after 20 September 1985 and was not used to produce assessable income at the time of death.
On XX/XX/20YY, probate was granted to the Executors.
The Executors attended to preparing the Properties for sale with this occurring between XX/20YY and XX/20YY.
In the meantime, the Executors also attended to preparing the Main Residence for sale. The Main Residence had been held in the Deceased's family for over XX and accordingly, there were a significant number of personal possessions that needed to be sorted and distributed. At times, this required organising up to XX beneficiaries to be present to discuss the distribution of the Deceased's possession; a task which was further complicated by COVID restrictions preventing movements during 2020 and 2021. Further, the Executors needed to undertake repairs to the roof of the Main Residence and attend to the removal of mould.
The estate administration process was further delayed by an error on the title of the Main Residence which was not identified until after probate was granted. The Executors could not dispose of the Main Dwelling unless and until XXX. The process involved several and complex steps which were delayed by reasons outside the control of the Executors.
On XX/XX/20YY title to the Main Residence was transmitted to the Executors. The Executors commenced the process of obtaining and engaging a real estate agent to sell the Main Residence.
On XX/XX/20YY the Executors entered into a contract to sell the Main Residence with settlement occurring on XX/XX/20YY.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-195