Private ruling: Deceased estates and Commissioner's discretion to extend the two year period
Date of advice: 17 August 2017
Published: November 2017
Ruling period: Year ending 30 June 2018
Date scheme commenced: 1 July 2017

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 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 inherited a XX% share in a dwelling before 20 September 1985. The deceased died in 20AA. The assets of the deceased’s estate were left to their child and their child’s spouse in equal shares with a provision that their third child, X, was to be provided accommodation for the remainder of their life. X has resided in the property in for a great length of time. In mid 20AA the executors met with solicitors and, upon advice, provided X with a copy of the Will. In late 20AA the executor’s requested the solicitors to arrange probate as soon as possible. In early 20BB probate was granted. In early 20BB the title of the property was transferred to the executors as the LPR of the estate. In early 20BB solicitors, on behalf of the executors, wrote to X to explain the terms of the Will and how their provision of accommodation was to be provided for, requesting a response. A further request was sent in early 20BB after no initial response from X. In early 20BB further correspondence was sent requesting a response to the initial request or to vacate the property by mid 20BB. In early 20BB solicitors acting for X advised the executors that X would be challenging the Will. They were advised they would be provided with a basis of challenge within one week. In mid 20BB, after repeated requests for basis of claim, X’s solicitors provided details of their claim and offered to negotiate a settlement. In late 20BB the executor’s solicitors wrote to X rejecting the claim and offer of mediation. No response was received and after several requests for reply, in late 20BB mediation was accepted by all parties. In late 20BB, after several requests by the executors to organise mediation, mediation was organised for late 20BB. In late 20BB mediation was cancelled as X was unavailable. In early 20XX mediation was successful and X agreed to vacate the property by early 20XX. The property was vacated in early 20XX. It took several weeks for contractors to repair damage, remove rubbish, replace glass, etc. After a sales campaign the property was sold at auction in mid 20XX with a X day settlement.

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