Edited version of private advice

Authorisation Number: 1052165886551

Date of advice: 6 September 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 (ITAA 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.

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 ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

The deceased passed away on XX/XX/20XX.

At the date of death, the deceased owned a property.

The property was initially purchased by the deceased and their spouse as joint tenants prior to 20 September 1985.

The property was transferred into the sole name of the deceased after 20 September 1985.

Following the transfer, the deceased and the deceased's spouse continued to reside at the property.

The property was the main residence of the deceased up until just prior to their death when they relocated to an aged care facility. The deceased continued to treat the property as their main residence up until their death.

The property was not used to produce assessable income at the time of the deceased's death nor at any time during your ownership period.

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

Probate was granted on XX/XX/20XX.

The deceased's will contained a clause to permit a beneficiary to reside in any dwelling or use any real or personal property. The will also contained a clause at the discretion of the trustee to provide their spouse with a place to reside.

The deceased's spouse continued to reside in the property up until their death on XX/XX/20XX.

Upon the deceased's spouse's death, the executor of their estate needed to renounce due to health reasons and the deceased's children were to act as executors of the estate.

The deceased's spouse was the sole director of several businesses and at the date of their death, there were outstanding business matters. These matters took some time to be attended to and the deceased's children needed to be appointed as directors of these companies.

The health of the deceased's spouse had declined following the deceased's death and the condition of the property had deteriorated.

Large volumes of household items had been accumulated over several years and the household fixtures had become damaged from smoke. A dog had been kept in the property which further required the inside of the property needing to be attended to. The garden had also become overgrown.

Real estate agents were contacted and advised that the household effects within the property and the curtains would need to be removed, the property would need to be repainted and the carpet would need to be replaced. They also advised that the yard would need to be tidied.

Efforts to clear the property were delayed as the household effects had become the property of the deceased's spouse's estate and the children needed to obtain probate for the deceased's spouse before they could dispose of the contents in the property.

The property was sold at auction on XX/XX/20XX, with settlement occurring on XX/XX/20XX.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195