Edited version of private advice

Authorisation Number: 1052200722912

Date of advice: 6 December 2023

Ruling

Subject: Commissioner's discretion - deceased estate

Will the Commissioner exercise the discretion under section 118-195 of the Income Tax Assessment Act (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?

Question

Yes.

Answer

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'

CGT exemption only applied up to and including 2 hectares of land. The 2 hectares chosen must include the land that is under your dwelling

Section 118-120 ITAA 1997 deals with land adjacent to your dwelling if it is close to or near your dwelling. The land must be used for private or domestic purposes and total land including land on which the dwelling stands must not exceed 2 hectares. Where any part is used to produce income, it is not exempt, even if the total land area is less than 2 hectares.

This ruling applies for the following period:

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 dated XX/XX/20XX.

At the time of his death, they owned land located at the property (the Property).

The deceased inherited the Property from their parent, who had inherited the Property from their parent.

The Property was originally acquired by the family in the 1800's.

The deceased acquired their ownership interest prior to 20 September 1985.

The Property was always the deceased's principal place of residence.

The Property was not used to produce assessable income before or after the date of death.

The Property is located on more than two hectares of land.

In December 20XX, the Property was transmitted to spouse of the deceased, and their two sons (one being the co-executor at the time) in their capacities as personal representatives.

The Will of the deceased granted his spouse right to use and occupy the Property.

The spouse remained living in the Property until May 20XX.

In late 20XX two of the executors sought advice as to whether the deceased's spouse had ceased to permanently reside at the Property.

They had previously made enquiries with other firms in late 2021 prior to approaching XXX Partners for advice on the estate.

In Early to Mid-2022 two of the executors sought a new grant (without the deceased's spouse) as the spouse had lost capacity to make decisions due to their medical diagnosis of Dementia.

The new grant was issued to XXXX and XXXX on XX /XX /20XX and the Property was transmitted in XX/ 20XX.

The Property was first listed in XX /20XX shortly after the Property was transmitted.

The Property was sold in XX/ 20XX

One of the executors decided they no longer wanted to be an executor for the estate and withdrew, consenting for their sibling to continue as the sole executor.

Probate was granted to the sibling on XX/XX/20XX.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195