Edited version of private advice

Authorisation Number: 1052383669276

Date of advice: 10 April 2025

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 (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?

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 ended DD/MM/20YY

The scheme commenced on:

DD/MM/20YY

Relevant facts and circumstances

On DD/MM/20YY, the deceased passed away, leaving a will.

At date of death, the deceased owned a property at XXX.

The property was the deceased's main residence, and they became sole proprietor of this property by survivorship in 19XX.

The will appointed Person A and Person B as executors, however Person A had pre-deceased the deceased.

The deceased's children, Person C and Person D were the beneficiaries.

On DD/MM/20YY, Person B obtained grant of probate.

At the time of the deceased's death, Person E was residing at the property and had resided in the dwelling for the preceding several years. Person E suffered from serious medical issues and was allowed to stay on in the dwelling rent-free but was responsible for the utility bills.

In MM/20YY, Person E moved into an aged care facility.

The executor was not aware that Person E had vacated the property until they were served with a clean-up notice from the council in MM 20YY.

The property was in a poor state of repair when the deceased died, and only deteriorated further. The deceased was a hoarder, and the house was full of rubbish.

In MM/20YY, the local council served a clean-up notice due to the derelict appearance of the property.

Person B lived in XXX and was caring for their spouse, whilst also working full-time, so finding time to clear the property was difficult.

Person C was left to clear the property, but they had health problems and were also a carer to a family member, so were limited in the time and effort they could devote to clearing the property.

The property was in an area that was heavily affected by lockdowns during Covid 19 which limited the ability to travel to the property to clear.

Person C used weekly rubbish collections and hired several skip bins to gradually clear the rubbish from the house.

In MM/20YY, the roof was damaged in a storm, resulting in some tiles being displaced.

Person C was then hospitalised and spent several months recovering.

There were no funds available from the deceased estate to assist with paying for clearing the property.

The property was not able to be placed on the market until MM/20YY.

On DD/MM/20YY, a contract of sale was signed on the property.

On DD/MM/20YY, settlement occurred.

At all material times, the property was not used for producing assessable income.

The property is less than 2 hectares in size.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195