Edited version of private advice

Authorisation Number: 1052252769518

Date of advice: 4 July 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 (ITAA 1997) to allow an extension of time for you to dispose of your ownership interest acquired 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 30 June 20xx

The scheme commenced on:

1 July 20xx

Relevant facts and circumstances

On xxxxxxxx the deceased purchased a property situated on less than two hectares of land.

On xxxxxxxx prior to the deceased passing a Will that appointed XxX as the executor of her estate.

On xxxxxxxx:

•         A Part IV Family Provision Testator Family Maintenance (Part IV TFM) claim was made on behalf of the deceased by a family member XXX and the former administrator. The Part IV TFM was on the basis that the XXXX was the deceased's domestic partner.

•         Due to contention of whether the XXXX had a financial responsibility to look after the deceased, settlement of the XXXX Estate could not be reached prior to the deceased passing.

On xxxxxxxx the deceased passed away.

On xxxxxxxx XxX was notified of:

•         The deceased's passing and commenced opening their files. This included identifying all beneficiaries in the estate and determining the deceased's assets to apply for a Grant of Probate.

•         Allegations of misappropriation of the deceased's assets prior to her passing were raised by a family member against the deceased's former financial administrator and XXX.

•         The deceased was also a plaintiff in the Part IV TFM, which had commenced prior to the deceased's passing.

On xxxxxxxx at the time of the deceased passing, they were under an administration order with XxX. An order was made which revoked a previous administration held by XXX.

On xxxxxxxx after being notified of the deceased's passing, XxxX representing the XXXX Estate sought instructions from XxX in relation to the Part IV TFM proceedings.

On the 12 of November 2015, XxX advertised their intention to act as Executor for the deceased's estate and would apply for a Grant of Probate after 14 days of this notice being published.

On 20 November 2015:

•         A summons to appear in court was held by XxX who had no authority to act on behalf of the deceased's estate at that time. XxX could not provide instructions to the lawyers.

•         XxX sought an adjournment to these proceedings for early xxxxxxxx as it was thought that the Grant of Probate for the deceased's estate would be issued to XxX by that date.

On xxxxxxxx XxX received notice from two of the beneficiaries in this estate that they would be making a Part IV TFM claim.

On xxxxxxxx:

•         The Grant of Probate application was completed and ready for lodgement when XxX was advised that a caveat had been placed on the Will by one of the beneficiaries. There were allegations that the Will had been changed at a time when the deceased's capacity was in question. Due to this, XxX was unable to proceed with lodging the application for the Grant of Probate as the caveat needed to be removed before XxX could do so.

•         XxX sought legal advice regarding whether an interim order from the Supreme Court could be obtained to finalise the Part IV TFM proceedings in the XXXX Estate, given that the trial had been adjourned until xxxxxxxx.

On xxxxxxxx XxX was advised the matter was adjourned until xxxxxxxx.

On xxxxxxxx, XxX lodged an application for Administrator ad litem (i.e., a limited administration order) with the Supreme Court so that XxX could be authorised to act on behalf of the deceased in the Part IV TFM proceedings and to remove the caveat that was placed on the deceased's Will.

On xxxxxxxx the Supreme Court removed the caveat that was placed on the deceased's Will.

In xxxxxxxx:

•         The Supreme Court granted XxX with letters of administration which provided limited powers to XxX for the purposes of dealing with the deceased's interest in the XXXX Estate only. The deceased's interests in this estate were funds the late XXXX bequeathed to the deceased in his Will.

•         The deceased also had a 50% ownership interest in a second property situated that was held as tenants‐in‐common with the late XXXX.

On xxxxxxxx the Supreme Court ordered for the caveat on the deceased's Will to be removed.

On xxxxxxxx the parties that placed the caveat had it removed.

On xxxxxxxx:

A Grant of Probate from the Supreme Court was granted to XxX after the Supreme Court established the Will was made by the deceased.

Once Probate was granted, XxX commenced administering the estate and arranged for the deceased's assets (shares, managed funds, and bank accounts) to be sold and closed. XxxX also continued their investigations regarding the allegations of misappropriation as well as the mediation process for the two TFM claims against the estate. After multiple mediation and court appearances, the property could not be sold until the terms of the settlement had been agreed to and approved by all parties.

On xxxxxxxx settlement of the TFM claims were agreed upon.

On xxxxxxxx the property had not been vacated by XXX as agreed to in the terms of settlement.

On xxxxxxxx XXX vacated the property and XxX arranged for it to be secured, however due to the upcoming holiday period, the sale process could not commence until early the next month.

Early xxxxxxxx:

•         The property sale was further delayed due to a break in and vandalism.

•         XxX could not arrange for sworn valuations or have a real estate agent come through the property until such time as all damages were repaired.

•         These repairs occurred within 2 weeks of the break in.

On xxxxxxxx XxX commenced the sales process and engaged a sales agent with the property selling at auction 6 weeks after the sales agent was engaged.

On xxxxxxxx settlement occurred.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195(1)(a)

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