Edited version of private advice

Authorisation Number: 1052243126283

Date of advice: 19 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 (ITAA 1997) to allow an extension of time to dispose of the ownership interest in the Property and disregard the capital gain 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 ending 30 June 2023

The scheme commenced on:

1 July 2022

Relevant facts and circumstances

The deceased passed away several years ago.

The property was acquired by the deceased prior to 1985.

The property was the deceased's main residence for the whole of their ownership period.

The property was never used to produce assessable income.

The property was less than 2 hectares in size.

The property remained vacant from the date of the deceased's death until settlement.

Probate was granted in the year after the date of death to the executor of the estate.

The property was prepared for sale, with cleaning etc done after probate was granted.

Contracts were drafted in readiness for a sale by the solicitor shortly after being placed on the market.

The property was placed on the market in the year after Probate was granted.

The property was sold, and settlement took place several years after the property was placed on the market.

The reasons for the delay in selling the property are:

There were Covid restrictions lockdown.

In the year after Probate was granted Organisation Z notified the executor that they needed to upgrade their sewer pipelines.

Organisation Z did not know how much land they would need to acquire until the work was near completion.

As the property was on the market all potential buyers were notified that the work was being carried out.

The property could not be sold until an easement was acquired and registered.

Organisation Z made contact again with the executor stating that they are reviewing the construction alignment to upgrade their wastewater pipeline.

Organisation Z made contact again with the executor stating that the project team will visit the property for inspection regarding the new wastewater pipeline.

The next time the executor heard from Organisation Z it was several months later, advising the executor that the work was planned to commence in the next month.

The executor was told that the project was going to be completed in a number of months.

The manager from Organisation Z sent the executor a letter of offer on acquisition of the easements a few months after the advised completion date.

The executor was able to employ a private valuer at this point.

This took time as both valuers had to meet.

Organisation Z completed the work in a few months after the offer of acquisition was received, however the driveway had to be repaired once they removed their heavy machinery from the property.

The Acquisition Manager from Organisation Z advised the executor shortly after the project was finished that both their valuer and the executor's valuer were going to have a meeting.

Several months after the project was finished, the executor received notification from their solicitor advising the executor that the easement registration was under way.

Settlement for the Easement took place in the month after the advice was receive from the solicitor.

The property could be sold at this point.

A purchaser was obtained in the same month as the settlement on the easement.

The register of the Easement took place.

The purchaser paid the deposit and signed the sale contract at this point and settlement took place in the later half of the year.

Throughout the relevant period the executor had a serious medical condition which they were receiving treatment for.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195