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Edited version of private advice
Authorisation Number: 1052244056595
Date of advice: 7 May 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
On XX XXX XXXX, the Deceased passed away.
On XX XXX XXXX, the Deceased purchased the Property.
The Property land size is less than 2 hectares.
The Property was not used for income producing purposes since it was purchased.
The dwelling on the Property was used as the main residence of the Deceased together with his partner, Person A throughout the ownership period.
The Deceased had two children: Person B and Person C.
In accordance with clause 4 of the Deceased's Will, the Property was subject to a right to occupy in favour of Person A.
In accordance with clause 4 when Person A ceased to reside in the Property it passed to Person B and Person C in equal shares.
The Executors named in the Deceased's Will, were Person D and Person E.
Person A continued to reside in the Property as their main residence until they moved into aged care.
Person A was the sole occupant of the Property before moving to the aged care facility.
On XX XXX XXXX, Person A moved into aged care.
At the time Person A moved into aged care there was uncertainty whether the move was temporary.
Before Person A passed away, they wanted someone to housesit the Property to avoid break-ins.
On XX XXX XXXX, Person A passed away. This was one month after moving into the aged care facility.
Person F is the child of Person B.
Between XX XXX XXXX and XX XXX XXXX, Person F stayed at the Property periodically. This was to insure the Property did not remain vacant for long periods.
Person F did not pay rent during the period.
Before contacting the executors of the Deceased Will, Person B and Person C contacted Tax Advisor A from Company A for tax advice and received the legal opinion of Lawyer A.
On XX XXX XXXX, Probate was granted for Person A's estate.
Person B and Person C hired Lawyer B to assist with the transfer of the Deceased's estate.
On XX XXX XXXX, Lawyer B sent correspondence to Person B and Person C advising that the legal opinion of Lawyer A was that Person A had a right of occupation and not a life interest. The email also advised that Lawyer B should write to Person D and Person E regarding the steps to be taken to transfer the Property.
On XX XXX XXXX, Person B and Person C separately emailed Lawyer B, instructing to prepare the beforementioned letter.
On XX XXX XXXX, Lawyer B sent the draft letter to Person B and Person C for approval.
On XX XXX XXXX, Person B and Person C sent correspondence approving the letter.
On XX XXX XXXX, Lawyer B sent correspondence to Person D and Person E advising that Person B and Person C indemnify them and of the intention to prepare an application to bring the land under the Land Tiles Act 1980.
On XX XXX XXXX, Lawyer B sent correspondence to Person B and Person C to review: the draft Deed of Release and Indemnity; and the draft application to bring the land under the Land Titles Act.
On XX XXX XXXX, Person C sent correspondence to Lawyer B approving the beforementioned draft documents.
On XX XXX XXXX, Person B sent correspondence to Lawyer B approving the beforementioned draft documents.
The draft documents were forward from Lawyer B to Person D and Person E.
On XX XXX XXXX, Person B, Person C, Person D and Person E all signed the Deed of Release and Indemnity.
On XX XXX XXXX, Lawyer B sent correspondence to Person B and Person C, advising that they had a signed copy of the Deed of Release and Indemnity.
On XX XXX XXXX, Lawyer B lodged the application to the Land Tittles Office.
On XX XXX XXXX, Certificate of Title showing the Deceased as the land holder was issued.
On XX XXX XXXX, Lawyer B sent correspondence to Person B and Person C containing a draft Transfer by Way of Assent for the Property. This was to be reviewed by them and then sent for signing to Person D and Person E.
On XX XXX XXXX, Lawyer B sent correspondence to Person B and Person C advising that Person D had signed the Transfer by Way of Assent documents, but they were still waiting for Person E to sign.
On XX XXX XXXX, Lawyer B sent correspondence to Person B and Person C advising Person E had signed the Transfer by Way of Assent documents and they had been lodged.
When purchasing the Property, the Deceased had not listed their middle name. The Deceased middle name had been previously spelt in two different ways. This discrepancy led to delays in transferring the property title into the names of Person B and Person C.
Person B and Person C attended to a number of repairs and maintenance issues in getting the Property ready for sale including:
• Cleaning the gutters.
• Fixing a leak in the roof above the garage.
• Fixing a leak in the roof above the front entrance.
• Repairing and painting a wall in the loungeroom damaged by the water leak above the front entrance.
• Deep cleaning of the Property.
• Garden maintenance and lawn mowing.
• There were no major improvements made to the Property after Person A moved out.
By XX XXX XXXX, the estate distributions had been finalised.
On XX XXX XXXX, the Property was transferred to Person B and Person C.
On XX XXX XXXX, Person B and Person C signed an agency agreement with Realtor A to list the property for sale.
On XX XXX XXXX, a contract was signed to sell the Property.
On XX XXX XXXX, settlement occurred.
None of the individuals are excluded foreign residents.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-195
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