Edited version of private advice

Authorisation Number: 1052328575155

Date of advice: 11 November 2024

Ruling

Subject: Commissioner's discretion - deceased estate

Question

Will the Commissioner exercise their discretion under subsection 152-80(3) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the time limit under subsection 152-80(1)(d) of the ITAA 1997 to a specified date to dispose of the properties?

Answer

Yes. Having considered the relevant facts and circumstances the Commissioner will exercise his discretion under subsection 152-80(3) of the ITAA 1997 and will allow an extension until a specified date to dispose of the properties.

It was considered that you had intended to sell the properties however, your will was disputed by your relative, there was an issue with the property titles and flooding occurred on the properties which resulted in the property clean-up prior to sale. Therefore, it is fair and equitable to allow the extension.

We have limited our ruling to the question raised in your application being whether an extension of the time limit will be granted. The private ruling on whether an extension of the time limit will be granted was issued on the basis that the Commissioner did not consider the deceased's eligibility for the small business concessions.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

On a specified date, Person A (the deceased) passed away leaving a will. The will appointed the surviving spouse Person B as executor and trustee, but as they pre-deceased Person A, it appointed their children, Person C and Person D as joint executors and trustees.

The deceased owned the following 3 properties, being Property A, Property B and Property C.

Farmland was spread across all the 3 properties.

The deceased acquired Property A and Property B in a specified year, and as at date of death was not residing in either of these properties. Property C was acquired by the deceased in a specified year and remained Person A's main residence up until the date of death.

On a specified date, Law Farm A advised Law Farm B solicitors who act for the trustee and deceased estate, that Person E, relative of the deceased intended to lodge a family provision claim upon the estate. The outcome was that the relative was paid a specified amount from the estate when the matter was finalised on a specified date.

On a specified date, probate was granted to Person C.

On a specified date, the trustees became aware of an issue with the property titles when they attempted to sell the properties and engaged a solicitor to rectify this situation. The trustees discovered that a parcel of land within the properties was not owned by the deceased according to the State title records. On a specified date, the trustees lodged an application for possessory title of all 3 properties.

The trustee allowed a local farmer to agist cattle on the land for a period of time prior to the sale of the properties.

On a specified date, the issues concerning the title documents were rectified, enabling all 3 properties to be placed on the market. Due to the nature of the land, and the difficulties presented by COVID, it took some time before buyers were found.

The land was also flooded for a period of time due to a floodgate being opened to protect the local town and residential area. This required some clean-up of the properties prior to sale.

On a specified date, the trustees engaged Company A to find buyers for the 3 properties. The trustees accepted the agent's advice to sell the properties separately and place each on the market at different times.

Company A found purchasers for Property C, and later the same purchaser bought Property B. They tried for some time but were unable to find a buyer for Property A.

The trustees rejected an offer of a specified amount for Property A and engaged a new agent to find a buyer to sell this property.

You provided us with details on the dates of when the properties were sold.

You provided us with details on the number of head of cattle at the time of the deceased's death. These were sold after the deceased's death and you provided us with details on the sale price.

Additionally, the farm produced hay used to feed the cattle the deceased held, as well as being sold commercially. Of the hay on hand at the date of death, some was used for the cattle, some was sold, and some remained unsold and eventually became unsellable.

The farm also provided agistment to other local farmers and continued to do so after the date of death.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 152-80

Income Tax Assessment Act 1997 paragraph 152-80(1)(d)

Income Tax Assessment Act 1997 subsection 152-80(3)

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