Edited version of private advice

Authorisation Number: 1052122284219

Date of advice: 26 May 2023

Ruling

Subject: Commissioner's discretion - deceased estate

Question

Will the Commissioner exercise the discretion under section 118-195 of the Income Tax Assessment Act 1997 to allow an extension of time for the Administrator to dispose of the ownership interest in the dwelling owned as trustee of the deceased estate and disregard the capital gain or capital loss made on the disposal?

Answer

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'

This private ruling applies for the following period:

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

The Deceased passed away on XX July 20XX.

At the time of the Deceased's death, she owned the Property. The Property was purchased on XX February 19XX and held in the Deceased's sole name.

The Property was always the Deceased's main residence and it was never rented.

The Deceased did not own any other property.

The Deceased and their spouse had children.

The Deceased left a handwritten Will dated XX July 20XX leaving the Estate equally between the spouse and their children. The Will did not appoint an Executor.

The Will did not comply with the legal requirements of a valid Will and this made the process to obtain a Grant of Probate very difficult. There were a number of legalities and complications to obtain the Grant:

• It was necessary to establish how the Deceased's Estate would be distributed without a valid Will. This involved making enquiries with all banks and solicitors to search for a Will.
• It also involved providing evidence that the Deceased was only married once during their lifetime to the spouse and that the Deceased was not the parent of any other children, aside from the children born from her marriage to the spouse.
• The Court issued the first requisition to the application for a Grant on XX September 20XX. From this period until the Grant was made in 20XX, the Court issued various requisitions in relation to the issues with the informal Will and the capacity of the beneficiaries. Two of them could not act on their own behalf.
• The Court required these two to consent to the Grant. Given they are both incapable, it was necessary to have someone appointed to represent their interests. It took protracted legal action to have a representative appointed.

The Grant of Letters of Administration was not made by the Court until XX February 20XX making one of the adult children of the Deceased sole administrator of the Estate.

The Property was transferred into the name of a sole Administrator (the "Administrator") on XX March 20XX. Prior to this date, no one was legally entitled to obtain possession of the Property and facilitate the sale.

The Administrator had engaged the services of a real estate agent to list the property for sale and engaged the services of a lawyer to prepare the Contract for Sale.

At this time, the Administrator became aware that a family member had allowed other persons to move into the Property. The Property was in a terrible state of repair with significant damage and rubbish.

Further protracted legal proceeding ensued. On XX March 20XX, the Court entered a Judgment/Order in the Administrator's favour for possession of the Property.

The family member and the associates did not vacate the Property. As a result of their failure to vacate the Property the Administrator were required to commence further proceedings in the Court for a Writ of Possession of the Property. On XX March 20XX, the Court entered a further Judgment/Order in the Administrator's favour for Writ for Possession.

On X May 20XX, the Sheriff successfully removed the family member and the associates from

the Property. During this time, the Estate did not receive any income from the Property

Costs of approximately $X were incurred in restoring the Property to a habitable state.

Immediately after the work was completed, the Property was listed for sale.

Settlement of the sale of the Property occurred on XX September 20XX.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 118-195

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