Edited version of private advice

Authorisation Number: 1052225467389

Date of advice: 26 February 2024

Ruling

Subject: Commissioner's discretion - deceased estate

Question

Will the Commissioner exercise the discretion under section 118-195 of 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.

This ruling applies for the following period:

Year ended XX XXXX 20XX

The scheme commenced on:

XX XXXX 20XX

Relevant facts and circumstances

In XXXX, the property was purchased (the Property).

The address of the Property where the dwelling is located is XXX.

The Property is less than 2 hectares in size.

The Property had a garage, four sheds and four bedrooms

In XXXX, the original owner passed away.

In XXXX, the Property was inherited by the Deceased.

On XX XXXX 20YY, the Deceased passed away, and left a will (the Will).

The Property was the Deceased's main residence.

The Property was not used at any time to produce assessable income.

The Deceased lived in the property by themselves.

After the Deceased passed away, the Property was not the main residence of either a spouse of the Deceased, or a beneficiary under the will, or someone under the will who had a right to occupy the Property.

The Property was vacant from the Deceased's date of death until it was sold.

The Will appointed the Deceased's brother as the Executor and trustee, but if the brother should be unwilling or unable to act then the Deceased appointed their relative, as the Executor and trustee.

The sibling passed away before the Deceased.

XX XXXX 20YY, Probate was granted to the relative.

XX XXXX 20YY, the Property was transferred to relative as Executor of the Estate (the Executor).

The Executor is of older age.

The Executor lived over an hour away from the Property.

The Executor required their adult child to take them to the Property to clean it in preparation for sale.

There was no one else who could have taken the Executor to prepare the Property.

The Executor's child worked full time and could only take them to the Property on weekends.

The only time of inactivity was during weekdays when the Executor's child was unable to take her to the Property.

The property took X years to clear due to the amount of items in the house and sheds.

Approximately four skip bins (from the local council) were used for the items that were discarded.

There were no repairs or improvements completed on the Property after date of death.

The Property was professionally cleaned once it had been emptied.

XX XXXX 20YY, the Property was placed on the market for sale.

On XX XXXX 20YY, a contract was entered into for the sale of the Property, which was signed by both parties.

The buyer of first contract dated XX XXXX 20YY pulled out of the contract the following day due to circumstances beyond their control.

The Property immediately went back on the market.

On XX XXXX 20YY, a second contract of sale was entered into for the property.

On XX XXXX 20YY, the Property settled.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195