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Edited version of private advice
Authorisation Number: 1052174656298
Date of advice: 2 October 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 ending 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
The deceased passed away on DD MM 20YY.
The dwelling is located at XX (the dwelling).
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.
The spouse of the deceased had pre-deceased them on DD MM 20YY.
The deceased (and the spouse of the deceased) were survived by their children.
In or about MM 20YY (before the deceased and their spouse passed away), an agreement was made between the spouse of the deceased and one of their children for their child to purchase the property from the spouse of the deceased/the deceased. This transaction was not documented.
After the passing of the deceased, the parties involved disagreed on how the property should be disposed of - one party intended to purchase the property (per the earlier agreement), and another party sought a sale of the property.
One of the parties lodged a caveat prohibiting the sale of the property. The caveat was filed on the basis that there was an agreement in place regarding a sale to them.
Counsel advice was sought with respect to the property and whether the earlier agreement was enforceable.
An agreement was reached between the parties and a deed of family agreement was executed on DD MM 20YY.
Settlement of the property occurred on DD MM 20YY
The property was not used to produce assessable income at any time after the deceased passed away.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-195