Edited version of private advice

Authorisation Number: 1052158125210

Date of advice: 22 August 2023

Ruling

Subject: CGT - 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 property and disregard the capital gain or capital loss you made on the disposal?

Answer

Yes. There is a factor not favourable in that you declined an offer and advised the real estate agent to organise the leasing of the property before the property ended up being sold a few months later, prior to it being rented out.

This unfavourable factor had a minor impact when compared with the delay caused by all the favourable factors and having regard to all the circumstances, we considered it appropriate to 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:

Income year ending XX XX 20XX

The scheme commenced on:

XX XX 20XX

Relevant facts and circumstances

The deceased passed away on XX XX 20XX and did not leave a will.

The deceased acquired the property after 20 September 1985.

The property was the main residence of the deceased just before they passed away and was not used to produce assessable income at that time.

The property was situated on less than two hectares of land.

After the deceased's passing, the administration of the estate was delayed due to the deceased passing in intestacy, and the need to locate and produce documents in relation to the deceased's divorce and guardianship of their children.

In addition, a hard border closure in response to COVID prevented you from being able to attend the property. When the COVID restrictions were lifted and you were permitted to travel, you took steps to attend the property and prepare it for sale.

Matters were further complicated because of ill health suffered by you whilst attending to the sale of the property and administration of the estate.

You engaged a real estate agent, and the property was listed for auction on XX XX 20XX. There were no bidders at the auction.

You declined a private offer for sale of the property.

On XX XX 20XX, you instructed the real estate to remove the property from market for sale and organised leasing of the property.

The property was sold a few months later, prior to it being rented out.

You executed a contract of sale for the property on XX XX 20XX with settlement occurring XX XX 20XX, less than six months after the expiration of the two year period.

The property did not produce assessable income from the deceased's death until settlement.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195