Edited version of private advice

Authorisation Number: 1052178395216

Date of advice: 10 October 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. 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 2024

The scheme commenced on:

1 July 2023

Relevant facts and circumstances

Approximately XX years ago, a block of land was purchased by the Deceased child and their spouse.

A duplex was built on the block of land.

In 20XX the Deceased and their spouse acquired their ownership interest in the Property when the Title of Unit 1 transferred to them.

A Strata Title was applied to the duplex.

Council rates were paid separately following the registration of the Strata Title.

The Property is less than 2 hectares and was not used to produce assessable income.

On XX XX 20XX, the Deceased spouse passed away and the interest in the dwelling passed to the Deceased.

On XX XX 20XX, the Deceased passed away and left a Will.

Shortly after the Deceased passed away, the administration of the Estate was impacted by flooding.

On XX XX 20XX, you had the Property valued in preparation for sale.

On XX XX 20XX, Probate was granted and sealed by the Court.

Following Probate being granted, you began preparations to sell the Property which included the building of a privacy wall and fence between the units.

You installed a new water metre as previously all expenses were shared between the 2 Units.

You identified that the back veranda of the Property crossed the boundary of Unit 2.

You hired a surveyor to assist with the boundary adjustment.

The surveyor was then impacted by the floods and was not able to complete the work.

As a result, you contracted another surveying firm that submitted a Development Application to the Council.

In XX 20XX, the Development Application was lodged.

In XX 20XX, you listed the Property for sale.

In XX 20XX, the Development Application was approved. The Council detailed that staff shortages impacted by Covid and the flooding events, in addition to a backlog of work delayed the approval process.

A new Strata Plan was registered to allow for the boundary adjustment.

You entered into a contract of sale.

The settlement of the first contract of sale fell through due to financial reasons.

On XX XX 20XX, you accepted another offer on the Property.

On XX XX 20XX, a new contract of sale was signed.

On XX XX 20XX, settlement is expected to be finalised, less than 1 month after the expiration of the two-year period.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195