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Edited version of private advice
Authorisation Number: 1052253716386
Date of advice: 24 May 2024
Ruling
Subject: Commissioner's discretion - deceased estates
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 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 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
Your parent (Parent A) purchased a property (the Property) prior to 20 September 1985.
The Property is less than 2 hectares in size.
Following Parent A's divorce, they transferred a share of the Property to you, a share of the property to Parent B and a share of the Property to your sibling.
The remaining share was sold to your stepparent (Parent C) at the same time.
Parent B and Parent C resided in the dwelling and it was their main residence.
Parent B died many years ago.
In accordance with Parent B's will, you and your sibling each inherited a further share of the Property.
Parent C was granted a life interest under the terms of Parent B's will and continued to reside in the dwelling.
Parent C had surgery and went to live with their family while they recuperated.
Parent C intended to return to the dwelling but their health began to deteriorate and as a result they did not return.
Person C continued to treat the dwelling as their main residence while they were living with their family.
All of Parent C's belongings remained in the dwelling and no one else resided there in their absence.
Person C signed a contract for the sale of the Property. However, they died a few weeks later before settlement had occurred.
Following Person C's death, the dwelling remained vacant and you continued to maintain it and collect the mail.
Parent C's relative Person A was their beneficiary and inherited their interest in the Property.
Following Parent C's death, probate was granted. A transmission application to note Person A on the title was then lodged with the relevant land registry service.
An updated contract of sale and a mutual deed of recission were exchanged between the purchasers and you, your sibling and Person A.
Some delays occurred with the land registry service. These delays were further complicated by the use of separate solicitors by you and Person A.
The transfer noting Person A on the Property title occurred some months later.
Settlement of the Property occurred the following month.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-195