Private ruling: Income Tax - Deceased estate - 2 year discretion
Date of advice: 1 March 2019
Published: May 2019
Ruling period: Year ended 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Will the Commissioner allow an extension of time for you to dispose of your ownership interest in the dwelling and disregard the capital gain you make on the disposal? | A1: Yes. Having considered your circumstances and the relevant factors, the Commissioner will allow an extension of time. Further information about this discretion can be found by searching 'QC 52250' on ato.gov.au

Relevant facts and circumstances: The deceased acquired a 50% share of a property before 20 September 1985. The property is less than two hectares. The home was the residence of the deceased, their spouse, and their children. The deceased separated from their spouse and ceased living at the property. The deceased never demanded that their former spouse sell the property. The former spouse and the children continued to live in the property as their main residence. The deceased remained on the title of the property as tenants in common in equal shares with the former spouse. The deceased passed away in 20XX. The deceased’s will left the half share of the property to their children, Person A, Person B, Person C and Person D. Probate for the deceased’s will was granted in 20YY. Person A (the executor) accepted administration of the deceased estate on the date probate was granted. The former spouse vacated the property in 20ZZ. The property was not used to produce assessable income. The property was valued in 20XX at $X. In 20ZZ the former spouse received an offer to sell for $X, with a personal guarantee being provided by the offeror for part payments over several years. The executor rejected the offer due to a number of issues, including the low amount. The executor obtained a new valuation which valued the property at $Y. The former spouse filed for consent for a trustee to be appointed under section 66G of the Conveyancing Act 1919 (NSW). The application did not proceed. An agreement was reached for the property to be placed on the market for sale. In late 20ZZ the former spouse and the deceased estate signed an agreement with a real estate agency to sell the property. The property was placed on the market for sale in late 20ZZ. An auction was held in late 20ZZ. This resulted in an offer of $Z but the offer was rejected by the former spouse in hopes of achieving a higher amount. A further offer was received of $XY. This offer was also rejected by the former spouse. A contract for sale was entered into in mid-20XY for $XX with settlement two months later occurring four years after the deceased’s death.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 subsection 118-130(3) | Income Tax Assessment Act 1997 section 118-195 | Income Tax Assessment Act 1997 subsection 118-195(1)