Edited version of private advice

Authorisation Number: 1052150737610

Date of advice: 10 August 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 (ITAA 1997) to allow an extension of time so that the capital gain made on disposal of the 50% share of the dwelling acquired by the deceased in 19XX be disregarded?

Answer

Yes. Having considered your circumstances and the relevant factors the Commissioner will allow an extension of time on the 50% share acquired by the deceased in 19XX. 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:

Year ending DD MM 20YY

The scheme commenced on:

DD MM 20YY

Relevant facts and circumstances

The deceased passed away on mid 20YY.

The Property at XX was purchased mid 19YY (pre-CGT) with their spouse as joint tenants.

The Property is less than 2 hectares.

Their spouse passed away in 20YY leaving the deceased their 50% share of the Property increasing the deceased ownership of the property to 100%.

The Executor of the estate was the son.

The Executor has a permanent disability and is confined to a wheelchair.

The Property was not the main residence of the deceased at the time of death as they had been living in an aged care facility since 20YY.

The property was rented from the time the deceased went into aged care and the property was sold.

Probate was delayed as solicitors advised that the forms were required to be signed in person.

Probate was obtained late 20YY.

Your Lawyer advised that in State A an eligible person has six months from the date of grant of probate is received to make a claim against an estate. If the executor distributes an estate to the beneficiaries before the six-month period is expired, the executor can be held liable to account to a successful claimant. Therefore, they advised against distributing an estate to the beneficiaries.

Between DD MM 20YY and DD MM 20YY, the Executor started to engage all beneficiaries of the estate about various options.

One of the beneficiaries lives overseas.

The Executor has open discussions with two of the beneficiaries about the possibility of demolishing the house and building a new one or completing significant renovations to suit his wheelchair access needs.

There was unsuccessful attempts at contacting builders who would not return the Executor's calls.

The price of building materials started to rapidly increase. Builders advised the Executor that there would be very long delays in demolishing and building a new home or renovating.

Early 20YY the Executor and beneficiaries decided to put the property on the market and engaged a real estate agent to sell the property

The Property was listed for sale on mid 20YY.

Sale of the contract was signed early 20YY

Settlement was delayed at the request of the purchaser by XX days

Settlement of the property was on mid 20YY

The Property was sold by the Executor of the Estate.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195

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