Private ruling: Deceased estate two year discretion
Date of advice: 7 November 2024
Published: 16 December 2024
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: 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? | A1: 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'.

Relevant facts and circumstances: The deceased passed away on XX/XX/20XX. The deceased and their spouse owned a dwelling that was acquired prior to XX September 19XX. On XX/XX/20XX, after the deceased's spouse passed away, their share of the property was transferred to the deceased. The property was the main residence of the deceased just before they passed away and was not used to produce assessable income at the time of death. The property was situated on less than X hectares of land. In 20XX, the deceased suffered an injury and the deceased's child moved from interstate into the property to care for them. In 20XX, the neighbouring property was purchased by a property developer. The developer encroached on the property to store items. Fences were moved and removed, and some damage was done to the property. Probate was granted on XX/XX/20XX, and the deceased's child was appointed executor of the will. After the deceased passed away, the deceased's child remained in the property. The deceased's child experienced stress and anxiety following the deceased's death. A significant amount of furniture, personal effects and other items had been accumulated and the deceased's child needed to sort through, sell and move items to storage and bequeath some items to other family members to dispose of. This took longer to action due to the stress and anxiety the deceased's child was experiencing. Once the property had been cleared, the deceased's child engaged with a real estate agent to advertise and sell the property. The deceased's child was concerned that the agent may have been acting in the interests of a potential buyer, due to the agent's suggestions of low counter offers. These concerns delayed the contact of sale and settlement as the deceased's child engaged with an independent valuer to assist with valuing the property. The deceased's child discovered that the purchaser was the developer of the neighbouring property, and this was not disclosed during the sale negotiations. A contract was entered to sell the property on XX/XX/20XX, with settlement occurring on XX/XX/20XX.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 118-195(1)