Edited version of private advice

Authorisation Number: 1052262286157

Date of advice: 14 June 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 so that the capital gain made on disposal of the dwelling can be disregarded?

Answer

Yes.

Having considered the relevant facts, the Commissioner is able to apply his discretion under section 118-195 of the ITAA 1997 and allow an extension of time to the two-year period. The circumstances and reasons as per PCG 2019/5 where we will allow a longer period where the dwelling could not be sold and settled within two years of the deceased's death due to reasons beyond your control that existed for a significant portion of the first two years, were satisfied to allow a discretion beyond the two years after the deceased's death in 20XX.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

Your parent (the deceased), passed away on XX/XX/20XX.

The deceased owned a property (the property).

The property was the deceased's main residence prior to passing away.

The property was purchased jointly by the deceased and their partner (the partner).

Your sibling's employment takes them away from home for six to eight months a year. Therefore, you became the legal personal representative (LPR).

Letters of administration were granted to you, as legal representative, in XX 20XX.

The deceased's partner passed away several months prior to the deceased.

The deceased was the executor of their partner's estate but passed away prior to the partner's estate being administered.

You also took over as the LPR of the partner's estate.

The deceased's stepchildren were included as beneficiaries under an earlier will for the estate, but this was revoked.

You were advised by your legal representative in XX 20XX that you should wait three months before taking steps to dispose of the property, to allow the deceased's stepchildren to challenge the terms of the will as they had reasonable grounds to challenge due to the details of the prior will.

In late XX 20XX, you, and your sibling, were confirmed as beneficiaries of the deceased's estate.

Title to the property was transferred to you and your sibling as beneficiaries.

While you were the LPR of the deceased's estate, you spent time as the LPR for the partner's estate, distributing the estate assets and finalising their estate. Your sibling began preparing the property to sell, finding a real-estate agent, transferring accounts and distributing assets as per the deceased's wishes which were not included in the will.

In XX 20XX, your sibling's spouse became unwell with a medical disorder. During your sibling's periods home from employment away, they needed to care for their child while their spouse was being treated, which lasted until XX 20XX.

For several months, you and your sibling needed to attend to one of the deceased's assets which had become an environmental hazard.

You relied on other people to assist you with the hour drive to the property as you work full-time and do not hold a driver's license.

There was a substantial amount of machinery and equipment that needed to be moved out of the garage by your sibling.

You relied on help from another relative who was also restricted due to surgery.

Approximately a year after the deceased's passing, you were diagnosed with a life threatening illness and began intense treatment which continued for almost a year.

Due to your compromised immune system, Covid prevented you from any physical outings due to the possibility of infection. You were hospitalised on one occasion.

Your most intensive treatment was completed in late XX 20XX. Your treatment is ongoing.

Between XX 20XX and XX 20XX, you and your sibling visited the property as often as possible to remove the deceased's and the partner's belongings.

The property remained vacant from the time the deceased passed away until it sold.

You approached a real estate agent in XX 20XX.

Shortly after, you received an email from the real estate with a list of items to be completed on the property prior to being listed for sale. You and your sibling attended to cleaning, repairs and anything else to make the property habitable and presentable for sale.

Your treatment and pain continued during this time, and you also went through further medical investigations.

The property was listed for sale a few months after the real estate agent was approached.

You accepted the first offer which was received the month after the property was listed.

The property sale settled approximately a month later. The settlement occurred less than six months after the expiry of the two-year period.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 118-195