Edited version of private advice

Authorisation Number: 1052297279413

Date of advice: 28 August 2024

Ruling

Subject CGT deceased estate 2-year discretion

Question 1

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 in the dwelling and disregard the capital gain or capital loss you made on the disposal?

Answer 1

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:

XX/XX/20XX

Relevant facts and circumstances

The deceased passed away on XX/XX/20XX.

The deceased died intestate.

The deceased owned a property (the property).

The property was the main residence of the deceased just before they passed away.

The property was transferred into the deceased's name on XX/XX/20XX.

The property is less than 2 hectares.

The property was not used to produce assessable income at the time the deceased passed away.

The property has never been used to produce assessable income.

The property was vacant from the time the deceased entered permanent care until the property was sold.

You are applying the Absence Rule for the period the deceased entered permanent care up until the date of death.

No renovations were undertaken on the property.

Letters of Administration were issued to the Public Trustee by the Supreme Court.

Notice of potential claims were received and could not be progressed until persons entitled to the estate were known.

A referral was sent to the State Trustee to locate the next of kin.

A final report was received from the State Trustee in relation to the entitled beneficiaries being the deceased's estranged children.

Testator's Family Maintenance proceedings were initiated by multiple claimants who initiated Supreme Court proceedings.

The claimants claimed entitlements in the deceased estate including the property.

A joint offer was received from the claimants and rejected by the entitled beneficiaries.

The Supreme Court ordered mediation.

Following meditation offers and counteroffers were made.

No action was taken with the property until agreement by all parties.

All parties agreed to list property for sale.

The property was listed for sale.

A Supreme Court directions hearing was held.

A second Supreme Court directions hearing was held.

Final agreement, between the claimants was reached.

A formal agreement with the executor of the estate was reached.

An offer on the property was received.

A second offer on the property was received and accepted.

Confirmation the second offer was unconditional was received.

Settlement was scheduled for X/XX/20XX.

Settlement was brought forward to X/XX/20XX.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195