Edited version of private advice

Authorisation Number: 1052244555922

Date of advice: 23 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

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

After 20 September 1985, the deceased and their partner person A acquired the property as joint owners.

The property is less than 2 hectares in size.

The deceased was predeceased by person A.

Under the terms of person A's will, some of their affairs did not need to be finalised while the deceased was alive.

The property was not used at any time to produce assessable income.

On XX XXX XXXX, the deceased died.

The property was the deceased's main residence at date of death.

After date of death the property remained vacant until settlement.

The deceased had three children who were the executors of the estate: person B; person C; and person D (the executors).

XX XXX XXXX, the executors met to discuss the management of the estate.

Person B was unable to attend to estate matters such as the dispersal of estate assets as they were occupied caring for their partner, person E, who suffered with terminal illness and passed away on XX XXX XXXX.

Person E was the lawyer of both the deceased and person A.

Due to person E's illness, they were no longer able to assist in the collation of the documents required for the management of the estate.

Between XX XXX XXXX to XX XXX XXXX, person C and person D were supporting person B as they managed person E's cancer.

During this time, person C and person D arranged:

•         The refunding of the deceased's Residential Accommodation Deposit

•         The recovery of an overpayment to the deceased's account by the Department of Veterans' Affairs

•         Transferred utilities and other regular payments,

•         Completed the identification of accounts

•         Notified the deceased's banks.

The executors attempted to find the original version of the deceased's will, which was not able to be located.

The executors were advised by real estate agents that it would be advisable to market the property during the peak demand times of spring or autumn. The executors developed a plan to clear the property for sale by mid-XXXX for a sales campaign in spring XXXX.

The agents advised the executors that all the assisted living installations should be removed for the best presentation for sale.

The executors arranged the return of several assisted living items from the home, including a hospital bed, a Vital-Call emergency pendant system, and various items such as commodes, mobility-assisting chairs, and walkers.

On XX XXX XXXX, the probate lawyer, lawyer A was engaged.

On XX XXX XXXX, the available documents for probate were assembled, and the intention to file notice was published.

There were delays for two weeks due to searches for the original copy of the deceased's will, which could not be found.

On XX XXX XXXX, the relevant investigations and affirmations were completed.

On XX XXX XXXX, Probate was granted.

Between XXX XXXX to XXX XXXX, the executors arranged the following to clean and prepare the property for sale:

•         Arranged the removal of The DVA installed robust railings and ramps to allow safe egress into the front and back yards of the house, as well as a chairlift with rails

•         Sort through the deceased's collection of approximately XXX paperback and hard cover books.

•         It took around one month for the books to be sorted and delivered in three carloads to the Lifeline Book Fair collection point.

•         Sort through person A's machine shop equipment and stock. person A had retained: XX items of hand equipment (hand tools. arc welders, battery chargers); over XX metal drawers and boxes of sorted stock (nuts, bolts, bushings, hose fittings); and over XX large containers of engine oils, greases, and paints.

•         These items were stored in two sheds on the property.

•         This required five box trailer loads of metal to be delivered to the recyclers, as well as one load of chemical waste, over a period of around two months.

•         Need to deliver person A's collection of XX gauge and.XX cartridges to the local Police Station.

By XX XXX XXXX, the property was cleared and was ready for agency inspections.

Between XX XXX XXXX to XX XXX XXXX, there were Covid lockdowns in place.

In XXX XXXX, person D was attending the property when the neighbours made a report to local police. The Police instructed person D that although the COVID restrictions permitted reals estate sales to proceed, they did not cover the engagement of an agent.

By XXX XXXX, the executors decided that due to the lockdowns they had missed the spring XXXX selling period and that the optimal time for listing would be the peak selling period in autumn XXXX.

On XX XXX XXXX, the executors sold the trailer boat which was located on the property.

Between the months XXX and XXX, the executors received marketing plans and conducted interviews with local real estate agents.

On XX XXX XXXX, the executors had selected a preferred agent and were negotiating the terms of an agency contract. The agent advised the preparation of a draft contract for sale which requiring a transfer of title.

On XX XXX XXXX, the executors learned of the neighbour's interest in purchasing the property when the shared fence was being repaired.

The executors decided to not continue with the real estate agent because of the interest from the neighbour.

On XX XXX XXXX, lawyer B was engaged and completed the title transfer.

The executors had the following professionally cleaned in preparation for open inspection by potential buyers: carpets; window finishings; kitchen appliances; and paving.

On XX XXX XXXX, the neighbour asked person D the price they wanted to sell the property for.

On XX XXX XXXX, person D informed the neighbour that they wanted to sell the property for $XX and that they intend to list the property for sale in spring.

On XX XXX XXXX, the neighbour said that they were interested and asked person D if they could wait until the neighbour had sold another property.

On XX XXX XXXX, person D informed the neighbour that they were interested, and that they would discuss this with the other executors.

On XX XXX XXXX, the neighbour asked person D for an email address to put the offer in writing.

On XX XXX XXXX, the executors informed the neighbour that a delayed settlement of two years was too long and stated they were in a position to negotiate a settlement date with the neighbour of XXX XXXX.

On XX XXX XXXX, the neighbour confirmed agreement of the price. The terms of the deposit were that there would be a delayed settlement time.

On XX XXX XXXX, person D informed the neighbour that lawyer B had started work on the contract on XX XXX XXXX.

On XX XXX XXXX, the final contract was drafted.

On XX XXX XXXX, lawyer B informed the executors that the neighbour was looking to exchange in the New Year.

On XX XXX XXXX, lawyer B informed the executors that the neighbour wanted to change one of the clauses in the contract.

On XX XXX XXXX, the contract was signed with the neighbour.

On XX XXX XXXX, the property settled.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195

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