Private ruling: Commissioner's discretion and deceased estates
Date of advice: 9 November 2017
Published: March 2018
Ruling period: Year ending 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Will the Commissioner exercise the discretion in section 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997) and extend the main residence exemption to 20XX? | A1: Yes. Having considered your circumstances and the relevant factors, the Commissioner is able to apply his discretion under subsection 118-195(1) of the ITAA 1997 and allow an extension of time until late 20XX. Further information on the relevant factors and inheriting a dwelling generally can be found on our website ato.gov.au and entering Quick Code QC52250 into the search bar at the top right of the page.

Relevant facts and circumstances: The deceased purchased property A after 20 September 1985. They had resided in property A as their main residence from purchase until their death in late 20WW. At this time it had not been used for producing income. Probate was granted in early 20YY. A claim was made against the Estate by a beneficiary. This claim was dismissed by the courts in early 20ZZ. The claimant was given XX days to appeal and chose not to do this. The deceased owned X separate properties at the time of their death. In addition to their main residence they owned Property B and Property C. Each property was bequeathed to a different beneficiary in the deceased’s Will. All the properties had different valuations at the time of the deceased’s passing. In early 20ZZ the deceased’s spouse lodged a claim against the Estate. As a result of this claim a Deed of Family Arrangement was entered into in early 20ZZ. The property was used to produce income from late 20XX to late 20YY, while waiting for the first claim on the Estate to be resolved. It was again used to produce assessable income from mid 20ZZ to late 20ZZ. The property was sold to the deceased’s child at market value after some negotiation. The property was sold in late 20ZZ and settled several days later.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 118-195