Edited version of private advice

Authorisation Number: 1052179744079

Date of advice: 17 October 2023

Ruling

Subject: Commissioner discretion - extension of time

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 to dispose of the ownership interest in the Property and disregard the capital gain 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

On XX/XX/20XX, the Deceased passed away.

As at the date of death, the Deceased was the owner of the Property. The Property consisted of a main residence that had been acquired in XX/20XX, and the Adjoining Block that had been acquired in 20XX.

At the time of acquiring the Adjoining Block, the Deceased entered into a contract with the State Government for its acquisition and paid the sale amount in full.

The total land size of the Property was less than 2 hectares.

The Property was the main residence of the Deceased for their entire ownership period and had not been used to produce assessable income.

The Deceased left a Will appointing the Executor.

In XX/20XX, the Executor sought legal advice regarding the administration of the estate. They were advised that the Adjoining Block had not been transferred to the Deceased due to an administrative error on the part of the State Government, and this issue would need to be rectified before the Property could be disposed.

In XX/20XX, the Executor engaged a solicitor to rectify the issue with the title to the Adjoining Block. The solicitor encountered major delays in their dealings with multiple state and local government entities in arranging for title to the Adjoining Block to be issued to the Executor.

In XX/20XX, title to the Adjoining Block was issued to the Executor.

In XX/20XX, the Executor was diagnosed with cancer and underwent treatment. Following the diagnosis and treatment, the Executor experienced a period of depression which hindered their ability to deal with the disposal of the Property.

Between XX/20XX to XX/20XX, COVID Lockdowns and restrictions hampered the Executor's ability to attend to the Property. This was further complicated by the Executor's employment commitments and caring responsibilities increasing and clashing as a result of COVID measures.

In late 20XX, the Executor engaged a real estate agent to arrange for the disposal of the Property.

In XX/20XX, the Executor entered into protracted negotiations with a potential purchaser of the Property. This culminated in the Executor and purchaser entering a contract for sale of the property in an 'as is' condition in XX/20XX. The buyer subsequently withdrew due to concerns about the previous title issues with the Adjoining Block. Following this, the real estate agent advised the Executor that the Property would be easier to sell if the rubbish was removed and the Property cleaned up.

Between XX and XX/20XX, efforts to arrange for the removal of items and clean up of the Property were hampered by significant whether events.

Between XX and XX/20XX, the Executor removed the rubbish from the Property and attended to the clean-up.

In XX/20XX, the Executor entered into a contract for sale of the Property with settlement occurring in XX/20XX.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195