Private ruling: Commissioner's discretion - deceased estates
Date of advice: 7 October 2022
Published: December 2022
Ruling period: Year ended 30 June 20XX.
Date scheme commenced: 1 July 20XX.

Ruling: Q1: Will the Commissioner exercise his discretion under section 118-195 of the Income Tax Assessment Act 1997 to allow an extension of time to dispose of the property and disregard the capital gain or capital loss 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: Before the introduction of capital gains tax, the Deceased purchased a dwelling. The dwelling is situated on less than two hectares of land. The dwelling was the Deceased's main residence. After the introduction of CGT, the Deceased passed away. The dwelling was not used for income producing activities and no income has been received from the dwelling after the passing of the Deceased. The Deceased's will, named the Public Trustee as executor and trustee of the Deceased's estate. Shortly after the passing of the Deceased a caveat was lodged against the Deceased's estate on behalf of Person A who was challenging the will, questioning the Deceased's capacity at the time the will was prepared. Not long after the caveat was lodged Person A passed away. Person A's Legal Personal Representative (LPR) continued to dispute the Deceased's will and filed another caveat against a grant of administration. A period later all parties involved agreed to proceed to mediation. A short time later Terms of Settlement were drafted and signed by two beneficiaries. A third beneficiary refused to sign off on the agreed settlement. Sometime later new Terms of Settlement were agreed and signed by all parties. Approximately five years after the Deceased passed away an Order to Administer was issued by the Court authorising the Public Trustee to administer the estate in accordance with the will. The dwelling was listed for sale. The sale contract for the dwelling was signed. Approximately five years and six months after the Deceased passed away settlement occurred on the dwelling.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 section 118-195