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Edited version of private advice
Authorisation Number: 1052318747918
Date of advice: 16 October 2024
Ruling
Subject: Commissioner's discretion - deceased estate
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:
1 July 20XX
Relevant facts and circumstances
The deceased passed away on DD MM 20YY.
The property is located at XXXX (the property).
The deceased acquired the property after XX September 19XX.
The property was the main residence of the deceased just before they passed away and was not used to produce assessable income at that time.
The property was situated on less than two hectares of land.
An initial application for probate was lodged by the executor of the estate - this application was rejected by the Supreme Court due to a caveat and a potential claim against the estate.
After the executor retained the services of a legal professional to represent them, it became difficult to receive consistent legal representation (for reasons such as personnel changes and the sale of the initial firm to another firm).
Probate was granted on DD MM 20YY.
On DD MM 20YY the property was transferred into the executor's name.
After the transfer of the property had finalised, the executor informed the Strata organisation the property belonged to that they were the new owner and they intended to sell the property. The Strata informed the executor that the property was non-compliant (as the deceased had made alterations to the property that they weren't notified of and as such were unapproved) and therefore not in a sellable condition.
After the executor was able to obtain assessments of the alterations required and schedule dates and times for the works to be performed, the annual meeting where approval would be granted to proceed with the alterations had just been held. The executor was advised the matter would be deferred to the next general annual meeting.
Following approval, the works on the property were completed in MM 20YY.
The property was placed on the market and sold, with settlement occurring on DD MM 20YY.
The property was not used to generate assessable income at any time between the date the deceased passed away until the date the property was sold.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-195