Edited version of private advice

Authorisation Number: 1052237629699

Date of advice: 9 April 2024

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 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

In XXXX, after 20 September 1985 the property was purchased (the Property).

The address of the Property where the dwelling is located is XXX.

The Property is XXXm2 in size.

In XXXX 20YY, the Deceased moved into an aged care facility.

Before moving into the aged care facility, the Property was not income producing.

On XX XXXX 20YY, the Deceased passed away.

From XXXX 20YY to date of death, the Deceased treated the Property as their main residence using the 6-year absence rule.

Between XXXX 20YY and date of death, the Property was rented excluding the period below.

From XXXX 20YY to XXXX 20YY, the Property was not rented out.

From XXXX 20YY, the Property was no longer rented out after the previous lease was terminated.

From XXXX 20YY to settlement, the Property remained vacant.

The Deceased left a Will and named the Executors.

On XX XXXX 20YY, the Executors applied to the Supreme Court for a Grant of Probate and the Original Will was lodged.

The Deceased stapled to their Will a note which did not change the dispositions under the Will. The Court requisitioned further information as to whether the note was to be admitted to proof as a testamentary document.

In XXXX 20YY, affidavits were lodged stating that the note was not testamentary in nature.

The Court requested details as to whether there were any further notes and asked for all notes to be lodged in Court.

The Deceased stored with their Will between one to two hundred sheets of papers in their handwriting, detailing where the Deceased wanted various assets to be distributed.

In XXXX 20YY, the beforementioned hundreds of notes were lodged with the Court.

On XX XXXX 20YY, the application for Probate was rejected as the Court requested further information regarding the notes.

Due to the volume of notes the Court requested that Counsel attend the Registry. Counsel advised that a further Probate application be made with affidavits from the Executors exhibiting the notes to the Court.

In XXXX 20YY, a further Probate application was lodged with affidavits exhibiting the Will.

The application requested that the Will be proved as none of the notes were sought to be admitted to proof.

On XX XXXX 20YY, the beforementioned application was rejected and Counsel advised that an application be made for the Will to be proved in Solemn Form.

On XX XXXX 20YY, proceedings were commenced in the Supreme Court.

One of the siblings and beneficiaries Person A was separately represented.

Person A's legal representative sought an extension of time and the directions hearing dated XX XXXX 20YY was rescheduled to XX XXXX 20YY.

Person A's legal representative sought a further adjournment, and the directions hearing was adjourned to XX XXXX 20YY.

The hearing was adjourned again to XX XXXX 20YY by consent, to try to reach agreement. The Executors disagreed that the notes had any testamentary nature and sought to prove the Will in Solemn Form per the application.

The hearing was adjourned to XX XXXX 20YY to allow the parties to negotiate agreement and the Court indicated that once agreement had been reached by the parties, the Court would need to make an independent assessment as to whether the notes were testamentary in nature, to decide whether the Will should be proved alone in Solemn Form per the application of the Executors.

Person A's legal representative and Counsel suffered health and family health issues on a number of occasions and negotiations were further delayed.

The hearing was adjourned to XX XXXX 20YY to allow further time to negotiate.

The hearing was again adjourned until XX XXXX 20YY, and the Court indicated that if the parties had not reached agreement, then the matter be listed for hearing.

On XX XXXX 20YY, the parties had not reached agreement and the matter was listed for hearing on XX XXXX 20YY.

On XX XXXX 20YY, the Record of Outcome was issued.

On XX XXXX 20YY, the Court made an Order Decreeing that the Will be Proved in Solemn Form and against the force and validity of the handwritten notes.

On XX XXXX 20YY, an application was lodged for Probate.

On XX XXXX 20YY, Probate was granted.

Between XX XXXX 20YY and XX XXXX 20YY, the Executors conducted further negotiation with beneficiaries of the Will regarding various matters.

In XXXX 20YY, the Executors began to clear and clean the property and obtain market valuations and quotes from agents.

A fence was built along the rear of the property as there was an old pool and there was no secure fence between the Property and the neighbours. This was a requirement by law for safety and to enable the sale of the Property.

Wallpaper was removed and walls painted in one room only. This was because the wallpaper was hanging down and had fallen off in places. It was in an unhygienic condition related to previous water damage in places.

A very small area outside on the balcony was repainted because it was unsafe. The old paint had lifted, fallen away in places with green mould / algae growing making it incredibly slippery. Given the need for house inspections for sale it was required to be fixed.

Following the decision of the Court on the force and validity of the Will, further hearings were adjourned between XX XXXX 20YY and XX XXXX 20YY, while the parties attempted to negotiate a settlement deed to settle a potential claim by Roseanne for further provision from the estate.

On XX XXXX 20YY, a Deed of agreement was signed to settle the dispute.

On XX XXXX 20YY, the Court made an Order that the matter had been settled.

On XX XXXX 20YY, the Property was auctioned.

On XX XXXX 20YY, the contract of sale was signed.

On XX XXXX 20YY, settlement occurred.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195

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