Edited version of private advice

Authorisation Number: 1052159522840

Date of advice: 24 August 2023

Ruling

Subject: Commissioner's discretion - extension of time

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 the ownership interest in the property and disregard the capital gain or capital loss 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 private ruling applies for the following period:

Year ending XX XXXX 20XX

The scheme commenced on:

XX XXXX 20XX

Facts:

The Deceased passed away on XX XXXX 20XX.

The Deceased owned the Property.

The land was purchased by the Deceased in 19XX and the dwelling was built on the land in 19XX.

The Property was the main residence of the Deceased at the time of passing.

The Deceased's Will is dated XX XXXX 20XX. The will appointed you, a relative of the Deceased, Executor and Trustee.

Probate was granted on XX XXXX 20XX.

The Estate is still under administration.

The property was not the main residence of the spouse of the deceased or a beneficiary under the will who had a legal right to occupy the property.

Timeline of events that delayed completion of the sale of the Property:

•                     The initial storm damage was the result of heavy rainfalls that started on XX XXXX 20XX. This resulted in the shifting and collapsing of structural piers and the earth embankment under the house.

-        You were under the assumption that as the insurer of the dwelling was assessing the claim, that Builder A would be appointed builder and would be carrying out the repairs.

-        The only repairs undertaken at this stage were of a temporary nature, consisting of structural bracing, provided by Builder A to prevent building from collapsing.

-        Meanwhile, you carried out additional work to remove water damaged flooring materials, skirtings and furniture to prevent mould growth.

-        You sought a second opinion from another builder, Builder B, in XXXX 20XX to advise on the required remedial works. They advised that the extent of damage was greater than on the original scope of works. This included a larger area of cracked asbestos sub-flooring and tiling above it.

•                     Remedial work was essential due to the damage to the underpinning of the dwelling. Cracks had appeared in the upstairs flooring and walls. There was concern raised from structural engineers for potential building collapse.

•                     In XXXX 20XX, the Insurer provided temporary bracing to prevent building collapse whilst assessing the claim.

•                     After a protracted period, Insurer would not pay out insurance to fix the damage due to consulting engineers determining that the earth embankment constructed when the house was built in 19XX, was of a slightly greater angle of incidence than the 30 degrees that the building code requires.

•                     On XX XXXX 20XX the insurer declined the claim for major structural repairs but the claim for the minor painting works was allowed on the same day.

•                     From XX XXXX 20XX, attempted to engage a builder. This resulted in further delay in getting the dwelling fixed for sale. The dwelling was unfit for habitation.

•                     You approached several builders in XXXX 20XX to assess and quote on the work required:

•                     You had difficulty in obtaining a builder to take on the remediation work involved in fixing the damage that had been caused, further complicated due to the presence of asbestos sheeting and the lack of trades persons and material available at that time due to Covid.

•                     Remediation repairs commenced in XXXX 20XX.

•                     Subsequent flooding took place in XXXX 20XX which resulted in more damage taking place.

•                     Repairs recommenced early XX XXXX 20XX.

•                     All structural remedial work was completed by XX XXXX 20XX.

The house was listed for sale in XXXX 20XX.

The Contract was signed on XX XXXX 20XX.

Settlement occurred on XX XXXX 20XX.

Throughout this period the dwelling was neither inhabited nor used to produce assessable income.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195