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Edited version of private advice
Authorisation Number: 1052154643022
Date of advice: 16 August 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.
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
Year ending 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
The deceased passed away on XX XX 20XX.
The deceased owned a dwelling (a unit) that was their main residence until they passed away and was not used to produce assessable income at that time.
The land area is less than 2 hectares in size.
You were appointed executor of the estate under the terms of the deceased's Will.
Under the Will you were left the residue of the estate which mostly consisted of the dwelling.
The deceased's sibling, (Person A), gave notice of claim by a creditor in relation to the assets of the estate. This occurred by letters dated XX XX 20XX and XX XX 20XX.
You engaged the services of legal representatives who corresponded with Person A on XX XX 20XX advising Person A to commence legal proceedings to enforce their alleged claim.
Person A commenced legal proceedings on XX XX 20XX.
The legal proceedings were referred by the Court for an informal settlement conference which proceeded on XX XX 20XX. The legal proceedings were settled at this conference. Final orders were made on XX XX 20XX.
Title to the dwelling was transferred to you on XX XX 20XX.
Prior to the deceased passing away legal proceedings had been commenced by the deceased as one of the owners of the strata plan XXX unit block to recover costs of rectification due to damage caused by excavation carried out on a neighbouring property.
These proceedings were resolved in XX 20XX.
The rectification works commenced in XX 20XX and finished in XX 20XX with sign off by the regulatory authority taking place on XX XX 20XX. Prior to the rectification work to the unit block being completed, the unit you inherited was unable to be rented out or sold.
The dwelling was listed for sale on XX XX 20XX. An offer was accepted a short time later with settlement occurring the following month.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-195