Edited version of private advice

Authorisation Number: 1052390884058

Date of advice: 6 May 2025

Ruling

Subject: Capital gains tax - 2-year discretion

Question 1

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 1

Yes.

Having considered your circumstances and the relevant factors the Commissioner will allow an extension of time. Further information about the Commissioners discretion can be found by searching ato.gov.au for QC 66057.

This ruling applies for the following period:

Year ending XX XXXXX 20XX

The scheme commenced on:

XX XXXXX 20XX

Relevant facts and circumstances

In 19XX, the late Spouse and the Deceased jointly acquired the Property, this was the main residence of the family.

On XX XXXXX 20XX, the deceased created and signed their Last Will and Testament.

On XX XXXXX 20XX, Child A moved into the family home as a full-time, unpaid carer for both parents, the spouse and deceased, giving up a personal residence (a rental property).

From XXXXX 20XX until XXXXX 20XX, Child A was not engaged in the workforce, giving up a profession and the independent income this position provided to live with and care for the parents.

On XX XXXXX 20XX, the Spouse died, their half of the property reverted to the deceased, the joint holder following joint survivorship.

The deceased continued using the property as their main residence up until the date of their passing.

On XX XXXXX 20XX, the deceased died.

The Will of the deceased left the Estate to their children, Child C, Child D, Child A, Child E, Child F, Child G and Child B.

Child B was named as Executor and Trustee of the Will.

Under the Will, no family member was given a right to occupy the property.

On XX XXXXX 20XX, Probate was granted to Executor Child B.

Child A had health issues and was diagnosed with a serious medical condition, preventing them from leaving the property until suitable accommodation could be found. The rental property needed to be clean, have no mould or pets.

Child B lived in the property with Child A, following the passing of the deceased, becoming their carer and providing support.

In XXXXX 20XX, Child A moved out of the property once their health condition had improved to the point where they could find somewhere else to live.

Child B prepared the property for sale and placed it on the market as soon as practicable.

On XX XXXX 20XX, a contract of sale for the property was signed.

On XX XXXXX 20XX, the property settlement occurred.

The property has never been used to produce assessable income.

Timeline of events from the passing of the deceased until Child A moved out of the family home

In 20XX, attended to deceased estate as required, sorting through family effects.

On XX XXXXX 20XX, a family meeting was held and documented. Agreement was made for Child A to remain in the family home as long as required and to prioritise Child A's future accommodation and financial well-being. This was a collective decision made by all siblings, taking into consideration Child A's health and financial situation.

In XXXXX 20XX, preparation commenced for Child A to re-enter the workforce:

•                     commenced working XX hours a week employment, with Company A.

•                     commenced Cert XX as previous qualifications were out of date.

•                     course was discontinued after one term.

XXXXX 20XX onwards

•                     employment ceased due to permanent closure of Company A.

•                     eligible for aged pension

•                     purchasing a residence became a priority

20XX

•                     continued real estate search

•                     XXXXX, saw a decline in health with ongoing consequences

•                     XXXXX - XXXXX you required medical attention at Hospital A twice weekly

XXXXX 20XX onwards

•                     began self-isolation due to Covid Pandemic

•                     real estate property search was limited because of lockdowns

20XX

•                     still in self-isolation due to Covid

•                     XXXXX saw a decline in health with ongoing consequences

•                     proffered loan was withdrawn

•                     transitioned to searching for a rental property

20XX

•                     search for rental property continues

•                     emerging rental crisis made it difficult to find the right property to suit health needs.

20XX

•                     XXXXX - XXXXX, medical care and after care requiredfor health conditions

•                     XXXXX, found and moved into rental property.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195