Private ruling: Income tax – deceased estate – pre-CGT property
Date of advice: 13 August 2018
Published: October 2018
Ruling period: Year ending 30 June 2018
Date scheme commenced: 1 July 2018

Ruling: Q1: Will the Commissioner exercise his discretion under subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) in relation to the dwelling on the property and allow an extension of time until 20XX | A1: Yes. Having considered your circumstances and the relevant factors, the Commissioner will allow an extension of time. Further information about the discretion 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 died in 20XX. The executors of the Will are Individual A (you) and Individual B. The Will provided that the estate would pass to Individual C and if they predeceased the deceased, then to their children in equal shares. Individual C predeceased the deceased and consequently the entirety of the estate was, on completion of its administration, to pass to the children. Included in the estate was a residential property which the deceased had purchased in their own name prior to 1985. Initially the deceased and Individual C lived in the property as their main residence but they moved out in 19XX. Individual C’s parents, Individual X and Individual Y and a sibling, Individual F, moved into it. The deceased allowed Individual X and Individual Y and Individual F to live in the property on a rent free basis only requiring them to meet the holding costs. Both Individual X and Individual Y died in the 19XX’s with Individual F continuing to then live in the property by themselves. Individual F insisted on paying the deceased some rent after their deaths. The deceased made no provision in the will to allow Individual F to continue to live in the property. Despite there being no provision in the will, the beneficiaries of the estate did not consider asking Individual F to move out due to Individual F’s medical conditions. Individual F insisted on paying the Estate $XXX a month until they were convinced about XX months later that it was not necessary. Individual F continued to live at the property until they were hospitalised and then went into a nursing home in 20XX. Individual F had spent XX years living at the property. Individual F had multiple medical issues and social difficulties which is the reason why you allowed Individual F to continue living at the property. You have provided a medical certificate for Individual F which confirms their medical conditions and stated that it would be safest for them to remain in the same accommodation. Once it became clear that Individual F was unlikely to return to live at the property you made arrangement to transfer the ownership of the property from the estate to the beneficiaries. You entered into a contract of sale in 20XX and settlement occurred in 20XX.

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