Edited version of private advice

Authorisation Number: 1052221887967

Date of advice: 23 February 2024

Ruling

Subject: CGT - Commissioner's discretion

Question

Will the Commissioner exercise the discretion under section 118-195 of 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 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 ended XX XXX 20XX

The scheme commenced on:

XX XXX 20XX

Relevant facts and circumstances

Deceased passed away interstate with no will.

Deceased was married until their passing.

The former spouse and deceased were together in a relationship at the time of deceased's passing.

At the time of their passing, deceased owned a share of a property as tenants in common.

Deceased was a party to a mortgage over the property in favour of a bank.

No consideration was paid for deceased's acquisition of their interest in the property.

Deceased acquired the interest in the property to facilitate the construction of a granny flat on the property.

The granny flat was for deceased and the spouse to reside in.

Following the construction of the granny flat, the other tenant in common continued to live in the property together with deceased and the spouse for many years.

At the time of the passing of the deceased, deceased used the property as their main residence.

The property was not used to generate any assessable income on behalf of deceased or their estate, either before or after death.

The other tenant in common has consistently resided at the property.

Former spouse has not resided at the property since the deceased's passing.

Former spouse was not residing at the property at the time of the deceased's passing.

Pursuant to the laws of intestacy, former spouse was appointed administrator of estate of the deceased.

From 20YY to20YY, the former spouse made attempts to deal with deceased's interest in the property including transferring it to the other tenant in common.

This involved multiple attempts with the other tenant, to facilitate the transfer of the property and resolve any outstanding and ongoing liabilities in relation to deceased's proportion of the mortgage.

In September 20YY, the former spouse provided signed documents to the other tenants' then solicitor to facilitate the removal of the mortgage from the property insofar as it related to deceased's share of the property.

The other tenant did not then arrange a transfer of the property nor a refinance of the loan secured by mortgage over the property for the purpose of removing the mortgage over the property.

On 16 December 20YY, the former spouse became registered on title insofar as the deceased's interest share of the property following lodgement of a transmission application.

By reason of the failure of other tenant to have refinanced the loan, the former spouse commenced court proceedings.

Those proceedings were resolved after a number of years.

A deed effecting the transfer of the share interest of the property to the other tenant was entered.

The property is otherwise less than 2 hectares.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195.