Edited version of private advice

Authorisation Number: 1052281500787

Date of advice: 8 August 2024

Ruling

Subject:CGT - 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 for you to dispose of your ownership interest in the dwelling and disregard the capital gain or capital loss you made on the disposal of the property and up to 2 hectares?

Answer:

Yes. The Commissioner will apply the discretion allow an extension to the two year time limit. However, the maximum area of land that is covered by the main residence exemption (including the area under the dwelling) must not exceed 2 hectares. You can choose which two hectares are exempt. Any capital gain made on the remainder on the property is subject to capital gains tax.

This private ruling applies for the following period

Year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts

The deceased passed away on DD MM YY without leaving a will.

As at the date of death, the deceased owned the dwelling.

The dwelling was the main residence of the deceased and was never used to produce assessable income.

The land area is XXXX hectares.

The deceased had 3 siblings, S1, S2 and S3.

S1 predeceased the deceased leaving X children.

Child 1 of S1, sought to apply for letters of administration for the deceased's estate and advertised their intention on the Supreme Court website on DD MM YY.

On the specified date, S2, and S3 the deceased's two surviving siblings also sought to apply for letters of administration.

On the specified date, S1, S2, and Child 1 made application to the Supreme Court to be appointed joint administrators the deceased's estate.

On the specified date, The Supreme Court requested further information and documents for their application including:

•         A detailed family tree.

•         Birth certificates.

•         Wedding certificates.

•         Death certificates.

•         Consent to administration from all beneficiaries.

•         Information about whether the deceased had half children or adopted children.

On the specified date, S3 passed away before letters of administration were granted.

On the specified date, S2 and Child 1 updated the notice of intention to apply for letters of administration following S3.

Between the specified dates, S2 and Child 1 worked to obtain the required information and documents requested by the Supreme Court.

On the specified date, S2 and Child 1 submitted their application to the Supreme Court for letters of administration.

Between the specified dates, the Supreme Court requested further documents and evidence in the support of the grant of administration.

On the specified date, S2 passed away.

The Probate of last Will for S2 and S3 was granted to Child 2, Child 2 is the child of S2 and related to S3.

Following the passing of S2, it was agreed Child 2 and Child 1 would now make application of letters of administration requiring a new application to be made.

Between the specified dates, Child 1 and Child 2 worked with the Supreme Courts further requirements to try and obtain letters of administration for the deceased's estate.

On the specified date, the Supreme Court determined they would not grant a composite grant.

On the specified date, the Supreme Court was informed that Child 1 was no longer applying for Letters of Administration and instead, Child 2 was making a single application as Legal Personal Representative for both S2 and S3.

On the specified date, letters of administration were granted to Child 2.

The dwelling was sold at auction on DD MM YY, and settlement took place on DD MM YY.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195