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Edited version of private advice

Authorisation Number: 1052281141471

Date of advice: 28 August 2024

Ruling

Subject:Deceased estates - 2 year discretion

Question

Will the Commissioner exercise the discretion under section 118-195 of ITAA 1997 to allow an extension of time for you to dispose of your ownership interest in the dwelling and disregard the capital gain or capital loss you made on the disposal?

Answer

Yes.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

The deceased passed away on XX/XX/20XX.

The deceased acquired the property before 20 September 1985.

The deceased owned the property under crown lease on XX/XX/19XX and since 20XX as a Freeheld land.

The property was the main residence of the deceased just before they passed away and was not used to produce assessable income at that time.

The property was left vacant after the deceased's death.

The property was situated on less than X hectares of land.

Probate was granted on XX/XX/20XX.

The deceased was a hoarder who had acquired a large number of possessions. Due to the extensive quantity of possessions, it required a large amount of time to sort through them to secure items of value.

The beneficiaries reside a significant distance from the dwelling.

The property was listed for sale on XX/XX/20XX to XX/20XX.

You entered into a contract to sell the property on XX/XX/20XX with settlement occurring on XX/XX/20XX.

A clause in the will gave the Trustee of the estate the power to sell the property in the administration of the estate.

Settlement for the sale of the dwelling occurred just over XX years and XX months after the date of death of the deceased.

The reasons for the delay to dispose the property included:

•         the property being in XXXX and approximately 5 hours' drive from XX's capital city of YY. The property itself is in a bay of "XXXX" 45 minutes' drive from the nearest town of ZZ. The roads to ZZ are bitumen and at least 17 kilometres is not in good condition. XX kilometres of the road is dirt/gravel and is often of bad repair with other hazards such as kangaroos,

•         that the condition of the roads and the expense contributing to your decision not to hire someone to declutter the house,

•         that on XX/XX/20XX you had COVID 19, and this put you out of action for the next 2 months, and

•         that it was on XX/XX/20XX that you learned that you needed to notify the Australian Taxation Office of the deceased's death and to complete his final tax return.

The above complexities of the deceased's estate delayed the disposal of the property.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195.

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