Edited version of private advice

Authorisation Number: 1052226893256

Date of advice: 6 March 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 acquired from a deceased estate 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 30 June 20XX

The scheme commenced on:

XX X 20XX

Relevant facts and circumstances

XX XX (the deceased) passed away on XX X 20XX.

At the date of their passing, the deceased owned a property at XX X XX (the property).

The property was purchased solely by the deceased in XX 19XX.

The property is less than 2 hectares in size.

The property was the main residence of deceased.

The property was not used for the purpose of producing any income during the deceased's ownership.

The deceased's will was dated XX X 20XX.

Probate was applied for on the XX X 20XX and granted on XX X 20XX.

XX XX and XX XX were appointed joint executors of the estate.

The executers agreed that XX child (XX) would caretake the property until the grandparent returned.

While taking care of the property XX and partner found that the property was in need of significant repairs.

XX partner who works in the building industry agreed to undertake the repairs at their cost for a consideration should they purchase the property in the event that XX was unable to return.

The deceased stipulated to the family members on many occasions that they would like the property to remain in the family.

There was no family trust deed entered into to sell the property to XX and partner.

An agreement to purchase the property was reached with XX and partner in XX 20XX.

In XX 20XX, XX and partner had saved a deposit and approached a banking institution.

The deposit saved was sufficient, however the bank chose not to proceed with approving the loan.

In XX 20XX, they approached another financial institution to apply for a home loan.

Securing finance through XX was made difficult by the following factors:

•         XX partner was a sole trader and that they would require a greater deposit.

•         Confirmation of the state of XX partner's business from their accountant.

Following advice from the bank, XX and partner decided that their best option to secure a loan would be to close the business and become an employee of another building company. This is what they did.

This took some time and was not completed by their accountant until XX 20XX thus delaying their loan application final approval by the bank.

In late 20XX the bank requested additional financial advice from the XX partner which required input from their accountant. Again, the accountant was not providing this advice in a timely manner so in XX 20XX they changed accountants.

Following these delays, it was not until XX 20XX that their loan was approved the bank and contracts prepared. Unfortunately, on the day contracts were to be exchanged the bank withdrew their approval for the loan.

In XX 20XX XX and partner sort the advice of a mortgage broker who has worked to get them a loan from another lender.

XX and partner did everything they could to progress the loan in a timely manner.

The property was sold by the Executors. Contracts exchanged XX X 20XX and settlement occurring XX X 20XX.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195