Edited version of private advice

Authorisation Number: 1052322715080

Date of advice: 24 October 2024

Ruling

Subject: Commissioner's discretion - deceased estate

Question

Will the Commissioner exercise the discretion under section 118-195 of 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

Yes.

Having considered your circumstances and the relevant factors the Commissioner will allow and 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 ending 30 June 20XX

The scheme commenced on:

XX XX 20XX

Relevant facts and circumstances

On XX XX 20XX the deceased passed away.

The deceased owned a property located at XX XX XX (the property).

The property was acquired before 20 September 1985.

The property is less than 2 hectares.

The deceased was the sole owner of the property when they died, and at that time it was their main residence and not being used to produce income. The property remained vacant and was not occupied by any person as their main residence before it was sold.

The deceased had XX children, XX of their XX children, Person 1 and Person 2 were appointed executors of their estate.

The executors live in XX and the other two beneficiaries live in XX.

Under the terms of the will, their XX children were to receive the net assets of the Estate as tenants in common.

The Executors had made the decision to liquidate all property of the estate and distribute money to the beneficiaries in accordance with the will.

Explanation for the delay in selling the property

The beneficiaries lived across XX and XX and did not all regularly speak to each other which meant the practical course of action was to sell the property and small holding of shares, rather than transferring the investments as tenants in common.

The property contained a double carport as well as a garage under the house with additional further storage under the house.

The deceased resided in the house for over XX years and accumulated a substantial amount of equipment, tools and materials during this time, having previously been a XX.

The sheer volume and weight of this accumulated items required multiple council collections needing to be booked over multiple months, industrial sized skip bins and substantial time to be removed.

XX 20XX to XX 20XX time was spent mourning.

Christmas shutdown and the solicitors takes an extended break in January. First available appointment with solicitors was XX 20XX.

XX 20XX the executors meet with the solicitors to commence the Estate administration by completing the probate application.

Email from solicitor post meeting thanked executors for their patience as the process may be slower with COVID restrictions impacting their work, including transitioning to working from home.

XX 2020

XXX is in lockdown which immediately impacted real estate activities. The ability to conduct any effective and uninterrupted marketing campaign to sell the property is severely impacted.

Following the application for probate, the executors planned to clean up the property at XX XX in conjunction with the remaining beneficiaries who were to travel from XXX to XXX to assist with this process.

As this was the original family home, there were personal effects which the executors wanted to give equal opportunity to all the beneficiaries to sort through during the clean-up.

As mentioned, there was also substantial amounts of items accumulated by the deceased over the XX years and the involvement of the other beneficiaries would make this process much quicker, given the executors had limited time off work during this period.

Limitations on gathering and 14-day quarantine requirements for XX beneficiaries meant the clean-up was delayed until the restrictions eased.

Person 1 and person 2 had employment obligations and continued to work for their employers during the lockdowns.

Solicitors advised they are still working from home and will aim to start the process of executing the will as soon as possible.

On XX XX 20XX probate was granted to Person 1 and Person 2.

XX 20XX to XX 20XX

XXX lockdowns and restrictions continue to impact real estate activities.

XXX border closures restrict the sibling's ability travel to XXX to help clean out their personal items and help ready the property for sale. They had made plans to travel to XXX in XXX, however, the border was announced closed on XX XX 20XX.

XX 20XX

On XX XX 20XX chemical cleanup occurred.

On XX XX 20XX Public Health Order on Restrictions on gathering and movement (Amendment No. 5) outlines auction/open homes requirements to have and comply with a COVID-19 Safety Plan. This marks the lifting of restrictions on real estate activities and is XX months since the original lockdown.

The XXX borders remained closed meaning the family's ability to recommence their plans to clean out the property at XX XX remain on hold as the siblings could not travel to XXX from XXX.

XX 20XX to XX 20XX

XXX border remains closed.

On XX XX 20XX removal of rubbish from carport occurred.

XX 20XX

XXX border opens to XXX.

Given the proximity to Christmas and work commitments of the siblings, the real estate plans are deferred to the new year.

XX to XX 20XX

There is a slow and cautious emergence from COVID-19 lockdowns and border restrictions. None of the beneficiaries wanted to rush out travelling and COVID vaccines was not yet available.

On XX XX 20XX, E-waste clean-up occurred.

On XX XX 20XX, council clean-ups took place.

XX 20XX

Lockdown number two commences on XX XX 20XX and immediately impacted real estate activities.

The ability to conduct any effective and uninterrupted marketing campaign to sell the property is impacted again.

XX 20XX to XX 20XX

State border is closed on XX XX and reopens on XX XX 20XX.

This restricts ability of siblings in XX to travel to XX again to assist with clean-up.

On XX XX 20XX, second chemical clean-up occurred.

XX 20XX

On XX XX 20XX, the easing of restrictions now meant vaccination and density limits did not apply to real estate inspections and auctions.

Face masks were not required outdoors and QR check-in was no longer required when inspecting a home. This signalled the lifting of restrictions on real estate activities and amounts to XX months after the original lockdown on XX XX 20XX.

XX 20XX to XX 20XX

Members of Person 1 family were diagnosed with COVID and were subject to 14 days isolation. This impacted the getting ready for sale process and appointment of a real estate agent as these COVID events spread over four months.

The most progress possible during this time was initial discussions with a real estate agent where advice was received to remove items from the house prior to marketing and sale.

XX 20XX

Person 1 books council clean up on XX XX 20XX. The first available date is XX XX 20XX which got cancelled by XX council. The next available date was XX XX 20XX.

XX to XX 20XX

On XX XX 20XX, council clean-ups took place.

On XX XX 20XX, council clean-ups took place.

Siblings travelled from XX to assist with clean out of the house.

On XX XX 20XX, discussions with multiple local real estate agents to find the most suitable. A formal meeting with XX Real Estate took place.

XX 20XX

Real estate agent engaged.

On XX XX 20XX final council clean-ups took place.

On XX XX 20XX, the property enter a contract for sale.

XX 20XX

The property settled.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195