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?
Yes. There were a number of underling factors which made this a complex issue under paragraph 12 of the Practical Compliance Guideline (PCG) 2019/5: • the dispute between the executors and appointment of the trustees • the need to repair the dock/jetty and pontoon for access to the property • the difficult sales process due to the location and aspects of the property being unique 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. This ruling applies for the following period : XX XXXXX 20XX The scheme commenced on: XX XXXXX 20XX
On XX XXXXX 20XX, the deceased, made a Will, listing their ownership in the Property, the property was solely owned by the deceased. On XX XXXXX 20XX, a codicil was made to the Will revoking the appointment of Executors and Trustees, Executor A and Executor B. Executor C and Executor D were appointed as Executors and Trustees. On XX XXXXX 20XX, Sibling A had the gift clause revoked, by codicil. In the substitution that gift is left to relative A. On 15 February 20YY, the deceased died. The Property was less than X hectares. The Property was the main residence of the deceased just before the deceased's death. The Property was not used for the purpose of producing assessable income at the time of the deceased's death. The Property was not the main residence of either the spouse of the deceased, or a beneficiary under the Will or someone under the Will who had a right to occupy the property. The sale of the property was delayed for two reasons :
The two initial executors and trustees, Executor A and Executor B were revoked via a Codicil in 20XX. The appointed executors and trustees, Executor C and Executor D intended to obtain probate, however, had a disagreement with the solicitor they appointed. Further details of this dispute are unknown. Both Executor C and Executor D, are beneficiaries of the estate and engaged the services of Solicitors A to obtain probate. Due to conflict between Executor C and Executor D probate was not obtained and both renounced the estate in favour of the Trustees and provided an Affidavit of the same. On XX XXXXX 20XX, Executor D made a renunciation of the Will in favour of the Trustees. On XX XXXXX 20XX, Executor C, made a renunciation of the Will in favour of the Trustees. In XXXXX 20XX, an application for Letters of Administration were filed by the Trustees. However, XXXXX 20XX, the Codicils made the application complex, and the Trustees legal team had to be involved. In XXXXX 20XX, Letters of Administration were granted naming the Trustees as Executors for the Estate. The Trustees were involved in a protracted saga to repair the pontoon that provided access to the property.
The property was only accessible via boat. In XXXXX 20XX, the existing pontoon was damaged in a storm. In XXXXX 20XX, the insurer paid out the claim only after a complaint was lodged with the XXXX. In XXXXX 20XX, further funds were paid out. In XXXXX 20XX, the construction of the new ramp and pontoon commenced. Delays were encountered whilst waiting for construction approval from Government Body A. On XX XXXXX 20XX, the ramp and pontoon were finished and installed. During XXXXX 20XX and XXXXX 20XX there was a pause in proceedings as it was deemed it would be too complicated to proceed at this time as internal staff and real estate agencies were expected to be closed during this period. On XX XXXXX 20XX, keys were collected by Company A for disposal of contents of the property. The property being only accessible by water, caused delays in getting things finalised and getting the property ready to be put on the market. On XX XXXXX 20XX, a Real Estate Agent was appointed.
X of the X residual beneficiaries had passed away after the deceased but prior to settlement of the estate. During the sales process it became apparent that Probate would also need to be obtained for those X deceased beneficiaries in order to proceed with the sales process as the sale would require the consent of the XXX of the estate of those X deceased beneficiaries. On XX XXXXX 20XX, marketing of the property commenced. The marketing campaign was prolonged primarily due to lack of interest in the property. The property required a lot of work, and this turned off a lot of potential buyers, especially since carrying out the works with the property only accessible via water presented a considerable challenge. On XX XXXXX 20XX, the auction took place and there was only X bid of $XXX,XXX. The auctioneer had used a vendor bid at $XXX,XXX. On XX XXXXX 20XX, an offer of $XXX,XXX was received. By this time the property had been on the market for XX weeks. COVID provided extra complexities during this time. On XX XXXXX 20XX, contracts of sale were exchanged. On XX XXXXX 20XX the settlement of the property occurred.
A capital gain of approximately $XXX,XXX was made on the sale of the property.
Income Tax Assessment Act 1997 section 118-195