Edited version of private advice

Authorisation Number: 1052225077529

Date of advice: 3 April 2024

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 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:

XX XX 20XX

The scheme commenced on:

XX XX 20XX

Relevant facts and circumstances

The Deceased passed away on XX XX 20XX.

As at the date of his death, the Deceased owned the Property.

The Property was on less than 2 hectares of land and had been used by the Deceased as their main residence since they acquired it post-20 September 1985.

The Deceased left a Will appointing the Executors.

Following the Deceased's passing, the Executors were unable to dispose of the Property as they were waiting on the Deceased's child to return from overseas and collect their belongings from the Property. The child was unable to attend to this due to travel restrictions in response to the COVID-19 pandemic.

On XX XX 20XX, the Executors applied for a grant of probate of the will.

On XX XX 20XX, the Property incurred significant damage from a severe weather event. Flood waters inundated the dwelling resulted in it being washed off its stumps. The Local Council Flood Information Report indicated the Property was in a locality prone to significant flooding.

In response to the severe weather event, the State Government announced that they would be establishing a buyback scheme for eligible properties in the Local Government area.

On XX XX 20XX, the grant of probate was issued to the Executors.

In XX 20XX, Local Council released discussion papers with a planned buy back scheme for flood affected homes such as the Property.

From XX to XX 20XX, State government held a parliamentary enquiry into the floods. During this time, State Government established the Authority. The enquiry resulted in a recommendation that the government offer to buyback flood affected homes such as the Property.

In XX 20XX, the federal and state government established the buyback scheme for flood affected homes. Oversight of the scheme was delegated to the Authority.

In XX 20XX, the Authority commenced information sessions about the buyback scheme. At this stage, the Authority had not determined the eligibility criteria for the buyback scheme.

In XX 20XX, the executors made initial contact with the Authority. They received a response the following month advising that the Authority were unable to provide a timeline as to when they would be contacted to confirm the Property's eligibility for the buyback scheme.

In XX 20XX, the Authority arranged a valuation of the Property.

On XX XX 20XX, the Authority made the executors an offer under the terms of the buyback scheme. The offer was open for a period of 90 days to allow time to discuss the offer further with the Authority and obtain independent legal and financial advice.

On XX XX 20XX, the Executors exchanged contracts with the Authority for the sale of the Property with settlement occurring on XX XX 20XX.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195