Edited version of private advice

Authorisation Number: 1052257914704

Date of advice: 4 June 2024

Ruling

Subject: Commissioner discretion - extension of time

Question

Will the Commissioner exercise 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 loss you made on the disposal?

Answer

Yes.

Having considered the 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 XX June 20XX

The scheme commenced on:

XX July 20XX

Relevant facts and circumstances

Date of Death - XX September 20XX

Property address - Property A

Property size - 986m2

Acquired ownership XX May 19XX.

The dwelling was the deceased's main residence until they died.

You have provided a copy of the Last Will and Testament and Probate documents.

The property was not used to produce assessable income up to the time of deceased's death.

The property was not the main residence of the spouse of the deceased, or a beneficiary under the will or someone under the will who had a right to occupy the property.

Property contract date XX March 20XX - Settlement date XX April 20XX.

The dwelling was sold by the Executor.

You are the sole Executor of the Deceased Estate.

You intended to the see the house as soon as practicable in order to dispose of the property within the X-year Capital Gains exemption period, after the date of death.

You were delayed in doing this by circumstances beyond your control.

You live in City A and your siblings property is in City B.

You were restricted throughout 20XX and 20XX due to COVID as the rules were strict in both State A and State B.

The house was ready for sale initially by XX February20XX, however it was then extensively damaged due to the flooding event in City B on XX February 20XX.

This event made the house uninhabitable and unsaleable due to the extensive water damage and severe mould infestation; it was also a health hazard.

The repairs on the house depended on the insurance company, who advised that the repairs would take a considerable amount of time to complete, due to the number of claims and labour shortages.

You intended to sell the house once it was repaired and became saleable again.

The 2-year capital gain exemption expired on the XX September 20XX, two years after your siblings death.

The vacant property was cleared out and general maintenance was completed to bring the dwelling up to a saleable standard, over a XX-month period, from the date of death.

This delay was caused by COVID restrictions and lockdowns, as you live in State A and the property is in State B, therefore you were unable to travel to City B to finalise everything and put the property on the market.

The property flooded on the XX February 20XX and was uninhabitable until the restoration was completed by the insurance company.

You sold the property at Auction once it was complete. The Auction took place on XX March 20XX.

Timeline

20XX

Lockdowns in both State A and State B meant that you were unable to travel to City B to care for your dying sibling, who was in and out of hospital.

Your other sibling, who also lives in Town A was able to be with during this time.

XX September 20XX

The deceased passed away and you were unable to go to State B due to the lockdowns within State A and State B.

You arranged their cremation alone from City A, and the Death Certificate which was problematic due to mistakes made by the State B's Government Department and the Cremation Company.

You received the Death Certificate XX November 20XX.

20XX

XX January 20XX-XX February 20XX

You drove from City A to City B to clear out the house.

It was necessary for you to drive as you needed to take an extensive amount of house renovating and gardening tools and equipment to help make the house saleable.

You also needed to bring back important documents and keepsakes.

During this time, you had discussions and appraisals with Real Estate agents, gaining advice on what needed to be done to make the house saleable.

XX February 20XX

You applied for Probate with the Solicitor in Town A.

You returned to City A on the XX February due to family issues.

You intended to return to City B within XXX weeks as you intended to put the house on the market after clearing it out and making the necessary repairs to make it saleable.

Due to the uncertainty of COVID restrictions, you had to bring all the tools and equipment home, meaning you had to drive up and down between City A and City B each time.

XX March 20XX

Probate was granted and you received the documents on XX March 20XX.

Lockdown restrictions were imposed again, and the borders were closed until XX December 20XX.

XX January 20XX - XX February 20XX

You drove from City A to City B again, to continue the necessary repairs to the house and put it on the market.

You had discussions and appraisals with Real Estate Agents.

You had planned to go back to City B in Late XXX/Early XXX to put the house on the market, so it would be sold and settled before the deadline for CGT of XX September 20XX.

XX February 20XX

XXX mm of water flooded your siblings house and property in City B due to a natural disaster.

A claim was made to the insurance company who advised it could take up to XX months to be repaired due to the volume of claims they had to process and repair.

Due to this delay by the insurance company black mould took over requiring the entire house, including the garage to be stripped out and refitted.

XX June 20XX- XX August 20XX

You drove from City A to City B, to continue to clear and maintain the property and check the progress of the repairs by the insurance company.

XX July 20XX - XX September 20XX

You drove again from City A to City B to maintain the property and garden and check the progress of the repairs.

XX December 20XX

The insurance company signed off and handed over the property, you were unable to travel to City B at this time, due to other commitments, however you were assured that everything was completed to the required standard.

XX January 20XX - XX February 20XX

You again drove from City A to City B to further maintain the property and garden.

You found numerous faults with the property and contacted the insurance company and builders in relation to this. These faults were fully rectified until a week before the property went to auction.

You signed a contract with the Real-estate agent on the XX February to auction the property on the XX March with a XX-week marketing period prior to auction and a XX-day settlement period.

The property was made ready for sale by installing carpet in the bedrooms and curtains throughout the house, then a stylist was engaged to furnish it. You continued to maintain the garden and landscaping.

You had to return to City A due to a death in the family, then another close friend died the next day, so you also had to attend that funeral. You had a wedding to attend as well.

XX March 20XX - XX April 20XX

You once again drove from City A to City B to oversee the rectification of the faults by the insurance company and also a last-minute garden tidy-up prior to auction day.

You have completed many trips to City B driving each time to transport the necessary tools and equipment including communications equipment, computers, printers, paperwork and files, and gardening tools.

You have committed yourself to selling the house in a reasonable timeframe, however, have incurred main delays due to unforeseen circumstances beyond your control.

You believe that you have sold the property in the shortest amount of time possible in views of the obstacles and difficulties that you have overcome.

XX March 20XX

Auction day - house sold with a XX-day settlement.

XX April 20XX

Settlement day.

Relevant legislative provisions

Income Tax Assessment Act 1997-section 118-195