Edited version of private advice

Authorisation Number: 1052161966145

Date of advice: 29 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 (ITAA 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 of the dwelling and up to 2 hectares of adjacent land (including the land under the dwelling)?

Answer

Yes.

There is a factor not favourable to your case in that the painting of the house was a choice you made rather than a matter that was out of your control. However, 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'.

You can apply the main residence exemption to whichever area of land you choose in addition to the land on which your dwelling is situated. However, subsection 118-120(3) of the ITAA 1997 specifies that the total of the land (including the land on which the dwelling is situated) must not exceed 2 hectares.

This ruling applies for the following period:

Income Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

The deceased passed away on XX XX 20XX and left a will (the Will).

The deceased acquired the property in XX 20XX.

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

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

After the deceased's passing, the administration of the estate was delayed. You had to wait for the Executor of the Will to do a search to make sure there was not a later will and to wait to ensure that the Will was not contested as it was thought that some family members may challenge it.

The property title was transferred to you on XX XX 20XX.

You had to clear the property and were required by the council to remove 5 acres of overgrown vegetation.

Your ability to do this was impacted by the serious health issues of your child who required numerous hospital admissions.

You painted the dwelling.

The property was listed for sale approximately 4 months before the expiry of the 2-year period and you reduced the asking price of the property twice, to try to achieve a quick sale to comply with the 2-year period.

You executed a contract of sale for the property on XX XX 20XX.

Settlement of the property occurred on XX XX 20XX, a few months after the expiry of the 2-year period.

The property was vacant from the deceased's death until settlement.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195

Income Tax Assessment Act 1997 subsection 118-120(3)