Edited version of private advice

Authorisation Number: 1052236181490

Date of advice: 27 March 2024

Ruling

Subject: Deceased estate - Commissioner's discretion

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 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 ruling applies for the following period:

Year ended XX XXXX 20YY

The scheme commenced on:

XX XXXX 20YY

Relevant facts and circumstances

The Deceased died on XX XXX XXXX.

In XXX, the property was purchased (the Property) in joint names after married with Partner A.

The Property was the deceased's main residence at the time of their death and was not used to produce assessable income at this time.

The Property is less than 2 hectares in size.

The Deceased had three children with Partner A: Person A, Person B and Person C.

The Deceased divorced Partner A.

The Deceased received full ownership of the Property from the settlement of the divorce.

Due to an oversight, Partner A remained on the title of the Property until XXX.

Partner A's ownership interest in the Property was transferred to the Deceased some years later.

In XXX, the Deceased remarried to Partner B.

The Deceased had a fourth child, Person D with Partner B.

In XXX, the Deceased separated from Partner B.

The Deceased never legally divorced from Partner B.

Person D lived with the Deceased to care for them until their death.

The Deceased died intestate.

The four children of the Deceased (the Parties) initiated a search for the Will of the Deceased sometime after the Deceased's death.

In XXX XXXX, the Parties contacted a Lawyer A from Company A who advised they should begin searching for a Will for the Deceased and next steps.

Company A did not respond to multiple contact attempts after this.

On XX XXX XXXX, the Parties contacted Lawyer B from Company B who recommended doing a Will search themselves.

Further phone calls with Company B but nothing was arranged to engage this firm.

From XX XXX XXXX, the Parties attempted to contact multiple law firms to locate a Will.

On XX XXX XXXX, the Parties received a letter from Company C confirming that they will act for the Parties as proposed administrators of the estate of the Deceased.

On XX XXX XXXX, Lawyer C from Company C was engaged.

Partner B had the legal right to:

•        The Statutory Legacy plus interest from the date of death to payment of legacy;

•  The Deceased's personal chattels; and

•  Half of the balance of the Deceased's estate.

The Parties sought to have Partner B surrender their claim on the deceased's estate, and had Lawyer C draft correspondence to request this from Partner B.

On XX XXX XXXX, the Parties approved the letter to be sent to Partner B.

On XX XXX XXXX, the Parties were given authority to apply for the Grant of Letters of Administration.

On XX XXX XXXX, authority was provided for Lawyer C to conduct a Title Search.

On XX XXX XXXX, an advertisement was published on the Probate Registry.

On XX XXX XXXX, the Parties provided latest Rates notice to Lawyer C as requested.

On XX XXX XXXX, application for Letters of Administration was sent to the Parties.

On XX XXX XXXX, the Parties requested updates to the application for Letters of Administration as the initial application contained incorrect information.

On XX XXX XXXX, an email advising application for Letters of Administration was amended and new affidavit was required for swearing/ affirming.

On XX XXX XXXX, further advice was provided regarding the swearing/ affirming.

On XX XXX XXXX, the Parties received an email advising that the Supreme Court had issued the Grant of Letters of Administration.

On XX XXX XXXX, the Parties started to paint the inside and outside of the house as required by the real estate agent.

On XX XXX XXXX, the Parties sent an email to Lawyer C requesting confirmation of next steps.

On XX XXX XXXX, Lawyer C advised via email to engage with an accountant for legal advice on Capital Gains Tax.

On XX XXX XXXX, an email invoice sent from Company C was received by the Parties.

On XX XXX XXXX, the Parties received an email requesting payment of legal fees to date and asking if they would retain Company C to complete the administration of the estate.

On XX XXX XXXX, the Parties sent an email receipt to Lawyer C confirming payment.

On XX XXX XXXX, the Parties spoke to real estate Agent A to arrange inspection of the Property.

On XX XXX XXXX, the Parties engaged Agent A to administer the sale of the Property.

On XX XXX XXXX, Agent A advised what was required to make the house saleable.

The Deceased had collected a large number of personal effects over their years residing in the Property which required significant effort to sort through and remove from the Property.

On XX XXX XXXX, the Parties sent an email to Lawyer C confirming payment for ongoing administration of the estate.

On XX XXX XXXX, the Parties received an email advising that they must attend the Commonwealth Bank in person to obtain the property Title.

On XX XXX XXXX, the Parties emailed Agent A their email details to send the Sales Authority.

On XX XXX XXXX, the Property was listed for sale.

On XX XXX XXXX, the Parties identified incorrect wording on the real estate website referring to the wrong house altogether. The floorplan of the Property was also listed incorrectly.

On XX XXX XXXX, the real estate agent advised this was corrected.

On XX XXX XXXX, a contract for the sale of the Property was executed.

On XX XXX XXXX, the Parties received email from the Conveyancer advising that the settlement would be delayed.

On XX XXX XXXX, settlement took place.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195

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