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Edited version of private advice
Authorisation Number: 1052190643164
Date of advice: 15 November 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 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.
Having considered your circumstances and the relevant factors the Commissioner will allow an extension of time. However, the extension only extends to the dwelling and the land to the extent that the land was used primarily for private and domestic purposes in association with the dwelling, up to a maximum area of 2 hectares.
As such, 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 periods:
Year ended XX/XX/20XX
Year ended XX/XX/20XX
The scheme commenced on:
XX/XX/20XX
Relevant facts and circumstances
The Deceased passed away on XX/XX/20XX leaving a Will.
The Deceased owned a dwelling at XXX, which was their main residence, and was never used to produce assessable income.
The Will appointed XXX as the Executor.
On XX/XX/20XX, probate was granted to the Executor.
There were a few animals on the Property that that needed to be cared for until they could be re-homed, this took a couple of months to organise.
In February 2020 the Queensland Government brought in new planning controls in regard to protecting koala habitats.
Due to this before listing the Property, additional research needed to be conducted, discussions with the real estate agent about whether it would impact a prospective developer's ability to get development approval.
The additional research also took some time to be completed, which then enabled a decision to be made on how to market the property.
In XX/XX20XX, the Property was first listed for sale.
There was interest shown in purchasing the Property by property developers, and in addition the size and zoning of the property made the listing more complex than most residential sales.
The Property is 5.22 hectares in total.
On XX/XX/20XX, a contract of sale was signed, with a 12-month settlement period.
The purchaser had some complications that held up settlement on the Property. Settlement occurred on XX/XX/20XX.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-195
Income Tax Assessment Act 1997 section 118-120(3)