Edited version of private advice

Authorisation Number: 1052204749744

Date of advice: 15 December 2023

Ruling

Subject: Commissioner's discretion - deceased estates

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?

Answer

Yes

Having considered the 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 ended XX XX 20YY

The scheme commenced on:

XX XX 20YY

Relevant facts and circumstances

The deceased purchased the property on XX XX 20YY.

The deceased lived in the property as their main residence until they passed away on XX XX 20YY.

The deceased passed away interstate.

The deceased had no spouse.

The executors Person 1 and Person 2 lived in a separate state to the deceased's property.

On XX XX 20YY, the executor's other child was diagnosed with cancer.

The child began chemotherapy on XX XX 20YY and finished this treatment on XX XX 20YY. The child then received a course of radiation from XX XX 20YY to August 20YY.

Letters of administration were granted on XX XX 20YY.

The executors provided ongoing care and maintenance to their unwell child and their grandchildren during this period.

Person 2 experienced severe asthma, breathlessness and coughing between XX 20YY and XX 20YY.

Covid-19 restrictions were introduced in 2020 and 2021 which imposed restricted travel between the relevant states.

In XX 20YY, Person 2 was diagnosed respiratory condition and advised that further infection will cause further damage.

Person 2's diagnosis of a respiratory condition classified them as a high risk during the Covid-19 Pandemic.

In XX and XX 20YY, Person 2 received treatments for medical conditions.

In XX 20YY, the executors travelled to the property to sort the deceased's household effects as Covid-19 restrictions lapsed within their states.

Throughout 20YY, Person 2 received various medical appointments to address underlying medical conditions.

From XX to XX 20YY, Person 2 received further operations to correct medical conditions.

On XX XX 20YY, Person 1 suffered a medical emergency and was hospitalised for 3 weeks.

In XX 20YY, Person 2 is diagnosed with another medical condition.

Person 1 underwent drug adjustments and rehabilitation which continued until XX XX 20YY.

On XX XX 20YY, Person 2 undergoes further medical appointments.

The executors contracted Covid-19 in XX 20YY.

In XX 20YY, the executors travelled to the property to prepare it for sale. The executors spent the first week at the property preparing it for sale. The executors then engaged real estate agents on XX XX 20YY.

The executors were advised the value of the property by the real estate agent which began marketing at the recommended amount.

The real estate agent provided weekly updates advising of inspection rates which they had received advice that for many weeks there was a lack of interest in the property.

The executors decided after XX months of advertising that due to the lack of interest in the property they would reduce the price.

The executors reduced the price a second time due to a lack of interest.

On XX XX 20YY, contracts for the sale of the property were exchanged and settlement took place on XX XX 20YY.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195(1)