Edited version of private advice

Authorisation Number: 1052168094980

Date of advice: 13 September 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 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. 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 ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts

The deceased passed away on xx xx 20xx.

The deceased acquired a dwelling. (The dwelling)

The dwelling was the main residence of the deceased until they passed away.

The dwelling has never been used to produce assessable income.

The land area is less than 2 hectares in size.

The deceased left a handwritten document described as a Will dated XX XX 20XX that was found by the attending emergency personnel.

A similar but not identical handwritten document also described as a Will and also dated xx xx 20xx was posted to person 'A' (executor) who the deceased had retained to prepare their Will.

The executor obtained and reviewed the medical file of deceased. This was necessary to prove that the deceased had testamentary capacity at the date of making the Will as the application was for the court to approve an informal will. This process caused some delays.

The executor wrote to the asset holders to ascertain the amount of money held by the deceased in preparation for the inventory and also ascertained any liabilities that were owed, including rates, water and other statutory bodies. Details were also obtained of the home loan.

The executor obtained details of all the intestacy beneficiaries and wrote to them. The executor also wrote to one of the witnesses, witness 'A' and had correspondence with them regarding the deceased making them a beneficiary of their Will.

The executor then prepared a brief, engaged a probate specialist to advise with regard to the application, prepared the draft application and swore it. Due to the nature of the bequest there is an unusual probate and they were appointed as a syndic. The executor then prepared consents for the intestacy beneficiaries to sign.

Following the filing of the motion all intestacy beneficiaries (of which there were X) were written to and provided a copy of the Will and advised to sign the consents, after obtaining their own advice.

The executor then went on to seek to obtain the consent of all these intestacy beneficiaries but was unable to do so. Ultimately the consent was obtained of some but not all beneficiaries. The effect of this meant that probate could not be dealt with by the probate Court and it meant it then needed to be referred to the Supreme Court of the relevant State. This caused further delays.

Following this, the affidavit of the Doctor was settled and an application to consent to the dispensing surety guarantee was also obtained.

Prior to finalising the application the executor had to arrange the appointment of the syndic which was completed on xx xx 20xx.

An affidavit was sworn on xx xx 20xx setting out the application for probate.

The matter was referred to the Supreme Court of the relevant State by way of notice to produce which was issued on xx xx 20xx, as it was not possible to obtain the consent of all beneficiaries.

An order was made by a Judicial Registrar on xx xx 20xx as to the orders required.

Probate was granted to the executor on xx xx 20xx.

Contract for the sale was signed on xx xx 20xx.

Settlement occurred on xx xx 20xx.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195

Income Tax Assessment Act 1997 subsection 118-120(3)

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