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Will the Commissioner exercise the discretion under section 118-195 of the Income Tax Assessment Act 1997 (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?

No. This ruling applies for the following period : Year ended 30 June 20XX The scheme commenced on: 1 July 20XX

Person A (the Deceased) owned a property (the Property). The Deceased acquired the Property prior to 20 September 1985. Prior to their death, the Deceased moved into an aged care facility. The Deceased was living in the dwelling at the Property until they entered the aged care facility. The Deceased died on Date one. In their will, the Deceased bequeathed the Property to their adult child (you). You are the executor of the Deceased's will. Your other parent also resided at the Property until their death. Probate was granted on Date 2. Following the granting of probate, you began to obtain quotes and organise for repairs to be undertaken on the Property. The works undertaken were as follows: •                 complete upgrading of the electrical wiring including a new meter box •                 repairs to the guttering •                 trimming of a large tree •                 removal of old timber, cupboards, clothes dryer, water softener, old tools and general accumulated rubbish from under the house, requiring several trips to a waste facility •                 you paid to have major furniture items including beds, cupboards, lounge and chairs removed.

You reside XXX kms from the Property so it was a roundtrip of approximately XXX kms each time you attended the Property. In 20XX, your spouse was diagnosed with a serious medical condition and had to have treatment for this. They continue to have treatment at regular intervals for this condition. They are also required to have inpatient hospital treatment every few months for another medical condition. On Date 3, you had an operation on your hand. After the operation you required ongoing treatment for several weeks. The Property was listed for sale on Date 4. The contract of sale was signed on Date 5. Settlement occurred on Date 6. Relevant legislative provision Income Tax Assessment Act 1997 section 118-195

Summary The Commissioner will not exercise the discretion in section 118-195 of the ITAA 1997 to allow an extension of time for you to dispose of your ownership interest in the dwelling. Detailed reasoning A capital gain or capital loss may be disregarded where a capital gains tax (CGT) event happens to a dwelling if you owned it as the trustee or beneficiary of the deceased estate. You will be entitled to a full exemption if your ownership interest ends within two years of the deceased's death. Your ownership interest ends at the time of settlement of the contract of sale. In your case, the deceased acquired the property before 20 September 1985. After the deceased passed away, you owned the property as trustee of the estate. The property was the deceased's main residence until just before they passed away and was not used to produce assessable income at that time. The property sale settled more than two years after the deceased's death. Therefore, you require the Commissioner's discretion to extend the two-year period to be eligible for a full exemption. Practical Compliance Guideline PCG 2019/5

The Commissioner's discretion to extend the two year period to dispose of dwellings acquired from a deceased estate provides guidance on factors we consider when deciding whether to grant the discretion. Paragraph 3 of PCG 2019/5 provides that we will allow a longer period where the dwelling could not be sold and settled within two years of the deceased's death due to reasons beyond your control that existed for a significant portion of the first two years. Paragraph 14 of PCG 2019/5 explains we weigh up all of the factors (both favourable and adverse). Paragraph 17of PCG 2019/5 provides a list of other factors that may be relevant to the exercise of the Commissioner's discretion which includes the sensitivity of your personal circumstances. In your case, we considered your spouse's medical conditions, your operation and the circumstances leading to the need for repairs which were outside of your control as favourable factors. We also considered other factors including your decision to have the works done and not sell the Property within the 2 years, which was not outside of your control.

Having considered the relevant facts, we will not apply the discretion under subsection 118- 195(1) of the ITAA 1997 to allow an extension to the two-year time limit. Therefore, the normal CGT rules will apply to the disposal of the property. You should note that the first element of your cost base for the property is its market value on the deceased's date of death. The cost of repairs can also be included in the cost base of the property. You are also entitled to the 50% CGT discount in relation to the property.