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Edited version of private advice
Authorisation Number: 1052328135022
Date of advice: 5 November 2024
Ruling
Subject: Commissioner's discretion - deceased estate
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 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 ending 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 their share in the property after 20 September 1985.
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.
The will of the deceased states their estate was to be distributed to their children.
An individual (Person A) - was appointed executor of the estate.
The initial solicitor was retained to administer the estate.
On DD MM 20YY Person A suffered a medical emergency. This required time to heal, leaving Person A unable to perform tasks relevant to the administration of the estate.
On DD MM 20YY, Person A received notice from a solicitor that the will of the deceased was to be challenged under a family provision order by another person (Person B).
Due to health concerns, Person A had to renunciate their role as administrator which was passed to Person C.
In MM 20YY, the initial solicitor retained was released from their duties. Obtaining a copy of the will from the initial solicitor took significant time and effort. The will was released on DD MM 20YY.
Person C retained the services of another legal firm to represent the estate. Grant of probate application was signed DD MM 20YY.
Initial market appraisal for the property was received DD MM 20YY.
On DD MM 20YY, the estate received an offer wherein the estate was to pay Person B a lump sum within a set time period. The offer was rejected. On DD MM 20YY the estate counter-offered another lump sum amount to be paid upon sale of the property. Person B counter-offered an offer of another amount to be paid to them when the property was sold - the estate accepted this offer.
On DD MM 20YY, Person B refused to sign the offer, therefore delaying the resolution of the estate. As of the issuing of this ruling, the matter is still outstanding.
The property was listed for sale DD MM 20YY. The property was sold and settled on DD MM 20YY.
The property has not been used to produce 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