Edited version of private advice

Authorisation Number: 1052273475720

Date of advice: 11 July 2024

Ruling

Subject: CGT - deceased estate

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 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

Before 20 September 20XX, the deceased (the Deceased) purchased a home (the Property).

The Property is less than 2 hectares in size.

On XX XX 20XX, the Deceased passed away, without a will.

The Deceased was survived by X adult children.

By operation of intestacy laws, the Deceased's children are each entitled to an equal share of the Estate.

The Deceased's child, (Child X), has required care from infancy. The Deceased was Child X's carer until their death.

On XX XX 20XX, a valuation report was completed for the Property.

On XX XX 20XX, Letters of Administration were granted and named one of your children (Child Z) as the administrator of the Estate.

After the Letters of Administration were granted, the lawyer advised Child Z (the Administrator) to have the property transferred into the Administrator's name in the capacity as administrator of the Estate.

The Administrator was not able to transfer the Property, as one of the beneficiaries lodged a caveat on the title to prevent the transfer. The caveat was placed on the property due to mis-trust.

The beneficiaries understood that the Deceased wished for Child X to continue to reside in the home after their death, for as long as required, and as a result of this, no one challenged the caveat.

The beneficiaries all agreed to allow Child X to remain in the Property.

Child Y moved into the Property and became Child X's carer.

Child Y and Child X continuously resided in the home following the Deceased's passing and paid household expenses such as land and water rates, electricity and phone bills.

The Administrator would make up any shortfall to cover expenses when Child Y and Child X did not have sufficient funds to address outgoings.

In late 20XX, Child Y suffered a stroke and was no longer able to care for Child X.

Child Y and Child X relocated to a community care facility.

From XX XX 20XX, the Property has remained vacant.

On XX XX 20XX, once Child Y and Child X had settled into care, the beneficiaries commenced cleaning the Property. Child Y and Child X had been hoarders.

Between XX XX 20XX and XX XX 20XX, the Property was cleaned out for a kerbside council pickup on the XX XX 20XX.

On XX XX 20XX, the beneficiaries were given an opportunity to review the contents of the home for any sentimental items.

Between XX XX 20XX and XX XX 20XX, the Administrator was overseas.

Between XX XX 20XX and XX XX 20XX, the house was cleaned out for another kerbside council pickup on XX XX 20XX.

Between XX XX 20XX and XX XX 20XX, Child Z was overseas.

On XX XX 20XX, a third kerbside pickup was completed.

On XX XX 20XX, the beneficiaries decided to sell the house.

On XX XX 20XX, the Administrator broke their arm and spent some time in hospital, then required a few months to recover and have full use of the arm.

On XX XX 20XX you engaged a solicitor to provide advice on selling the Property.

On XX XX 20XX, you approached a tax agent to seek advice on the capital gains tax implications.

On XX XX 20XX, you engaged a real estate to sell the Property.

On XX XX 20XX, the dwelling was listed for sale.

On XX XX 20XX, the Property was sold at auction, and you entered into a contract of sale.

On XX XX 20XX, the Property settled.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195