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Edited version of private advice
Authorisation Number: 1052310592288
Date of advice: 26 September 2024
Ruling
Subject: Deceased estates
Question
Will the Commissioner exercise the discretion under section 118-195 of Income Tax Assessment Act 1997 (ITAA 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 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 20XX
The scheme commenced on:
XX XXXX 20XX
Relevant facts and circumstances
On XX XXXX 20XX, the Deceased and their late partner acquired the property.
Around 19XX, the property was subdivided with the residence being demolished and the property built on the estate's title in or around 19XX.
The property is less than 2 hectares in size.
The property was the Deceased's main residence at the time of their death and was not used to produce assessable income at any time.
Person A, Person B, Person C were children of the Deceased. Person D was a grandchild of the Deceased.
From 19XX, Person B resided in the property with the Deceased. Person B was the deceased's carer and provided ongoing domestic support and personal care to the deceased. Person B continued to reside in the property after the Deceased passed.
On XX XXXX 20XX, the Deceased executed their last Will and testament, where:
• Person A and Person B were named executors (the executors).
• The estate was left in equal shares to Person A, Person B, Person C and Person D (the parties).
On XX XXXX 20XX, the Deceased passed away.
The Deceased was not a foreign resident.
On XX XXXX 20XX, Probate was granted to the executors. The net estate disclosed for probate purposes was initially disclosed to be $XX.
In XXXX 20XX, Person B engaged lawyer A to assist in a claim for a debt.
From XXXX 20XX, the executors were drafting an affidavit for additional assets and liabilities to be disclosed to the court.
On XX XXXX 20XX and XX XXXX 20XX, the executors filed an affidavit of inaccurately described assets and liabilities, which disclosed a debt due to Person B leaving a net estate in the sum of $XX.
In XXXX 20XX, Person B engaged loan brokers to possibly borrow to pay out the other beneficiaries reduced interest in the estate.
In XXXX 20XX, a Deed of Family Arrangement was drafted in respect of the dispute between the executors on how to finalise the administration of the Deceased's estate.
On XX XXXX 20XX, the deed was executed by the executors. However, the Deed was not binding on beneficiaries of estate. As a result of the deed, lawyer A was conflicted from providing any further advice to the executors.
On XX XXXX 20XX, Person B issued proceedings in the Supreme Court seeking orders in respect of their claim.
On XX XXXX 20XX, Person B filed a claim in the Supreme Court seeking the imposition of a constructive trust over the property or restitution for the funds they contributed towards the property since 19XX.
On XX XXXX 20XX, the parties participated in mediation where an agreement was reached.
On XX XXXX 20XX, the Supreme Court made final orders. Person B was permitted to reside in the property until XX XXXX 20XX.
In XXXX 20XX, Person B vacated the property after difficulties locating and securing alternative accommodation.
On XX XXXX 20XX, the property was sold.
On XX XXXX 20XX, the property settled.
No repairs or improvement were made to the property after the deceased passed.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-195
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