Edited version of private advice

Authorisation Number: 1052277341874

Date of advice: 18 July 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 to allow an extension of time for you to dispose of your ownership interest acquired 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

Relevant facts and circumstances

After 20 September 1985 Person A purchased the Property situated on less than two hectares of land.

Since October 2, Person A's child resided with them at the Property.

On xxxxxxxx Person A (the Deceased) passed away. At the time of the deceased's death the property used for the purpose of producing assessable income.

The same month three of the four Executors met with their legal representative. The other Executor resided overseas and was unable to travel due to COVID-19 lockdowns and travel restrictions.

On xxxxxxxx the three local Executors signed the Probate application documents.

On xxxxxxxx the Probate application documents were s sent to the Executor residing overseas.

On xxxxxxxx the Executor residing overseas signed the Probate application documents.

On xxxxxxxx the Executors application for a grant of Probate was sent by post to the Probate Registry, Supreme Court.

On xxxxxxxx Probate was granted to the Executors.

In xxxxxx the Executors received advice to auction the Property. The Executors rejected that advice in favour of seeking an immediate sale of the property to ensure settlement occurred prior to expiry of the CGT exemption.

On xxxxxxxx a listing agent viewed the property on and advised the Executors to sell the property without carrying out any works and the property was listed for sale.

On xxxxxxxx an open house was conducted.

xxxxxxxx offers closed on the property and a contract for sale (the First Contract) was signed on the closing date. The First Contract was subject to the purchasers obtaining finance, a building inspection and sale of the Purchaser's property (the First Purchaser) by xxxxxxxx.

On xxxxxxxx the First Purchasers requested an extension to obtain finance.

On xxxxxxxx the First Purchasers had failed to sell their property and requested an extension on that day to xxxxxxxx.

On xxxxxxxx, the Executors granted an extension to the subject to sale clause to the specified date and continued to list the property for sale.

On xxxxxxxx and the following day an open home was held at the Property.

On xxxxxxxx the Executors signed a second Contract for Sale (the Second Contract) subject to the Second Purchasers (the Second Purchaser) obtaining finance by the specified date and the first Contract being at an end.

On xxxxxxxx the First Purchasers were unable to satisfy the terms of the contract and requested a further extension.

On xxxxxxxx the First Purchasers request for a further extension was denied and the contract was terminated by the Executors.

On xxxxxxxx the Second Purchasers satisfied their finance clause with settlement of the Second Contract due on xxxxxxxx.

On xxxxxxxx Settlement was delayed as the child did not vacate the property until that morning.

On xxxxxxxx Settlement occurred.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195