Edited version of private advice

Authorisation Number: 1052384805636

Date of advice: 28 May 2025

Ruling

Ruling Subject: CGT - deceased estate

Question 1

Will the Commissioner exercise his discretion under section118-195 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 1

Yes. Having considered your circumstances, the dispute between the relevant parties, and all the relevant factors the Commissioner will allow an extension of time.

This ruling applies for the following period:

Year ending XX XXX 20XX.

The scheme commenced on:

XX XXX 20XX.

Relevant facts and circumstances

The property is located at Address A.

The property is on less than 2 hectares.

On XX XXX 19XX the deceased acquired the property jointly with their spouse as joint tenants.

On XX XXX 20XX the deceased made their last will and testament, revoking all other wills. The will named their children Person A and Person B, and also their relative Person C as executors of the estate.

The will left the entirety of the estate to the deceased's spouse should they survive them.

Should the spouse have pre-deceased them, the will gave Person A a right to reside for X years in the property.

The will also directed that the trustees of the estate must make a written offer to Person A to purchase the property at market value. The offer was to lapse X months following the deceased's passing.

The residual of the estate was to be divided equally between Person A and Person B.

On XX XXX 20XX the deceased became sole proprietor of the property under survivorship application when their spouse passed away.

On XX XXX 20XX the deceased passed away.

In XXX 20XX Lawyers A were engaged by Person A and Person C as executors to assist with obtaining probate. The intention to apply was advertised on XX XXX 20XX.

On XX XXX 20XX Lawyers A wrote to all 3 executors forwarding a draft of the application for probate.

On XX XXX 20XX Person B sent an email to Lawyers A querying the inventory of the estate. Lawyers A responded by emailing all 3 executors to clarify the assets of the estate.

On XX XXX 20XX Person B advised Lawyers A by email that they declined to swear an affidavit as an executor and sign the inventory of the estate.

On XX XXX 20XX Person A engaged Lawyers B who then wrote to Person B regarding the probate application.

On XX XXX 20XX Person B engaged Lawyers C who replied to Lawyers B querying an historical loan to Person A, withdrawals from the deceased's bank account prior to their passing, and an amount that Person B contended Person A was to be holding on trust for the deceased.

On XX XXX 20XX Lawyers C replied to Lawyers B disputing Person B's claims.

On XX XXX 20XX Lawyers B replied to Lawyers C disputing Person A's claims.

On XX XXX 20XX Lawyers B replied to Lawyers C disputing Person B's claims and advising of pending action regarding the refusal of Person B to proceed with probate.

On XX XXX 20XX Lawyers C replied to Lawyers B disputing all claims.

On XX XXX 20XX Lawyers B replied to Lawyers C in continued dispute of claims.

On XX XXX 20XX Lawyers C wrote to Lawyers B in continued dispute of claims.

On XX XXX 20XX Person A and Person C applied to the court under the Administration and Probate Act 1958

On XX XXX 20XX Person A and Person C filed affidavits as plaintiffs.

On XX XXX 20XX Person B engaged Lawyers D to represent them.

On XX XXX 20XX Person B filed an affidavit as defendant.

On XX XXX 20XX the first court proceedings were adjourned.

On XX XXX 20XX Person A and Person C filed reply affidavits.

On XX XXX 20XX the Court referred the matter for mediation.

On XX XXX 20XX mediation was attended by all parties and agreement was reached for Lawyers E to seek probate.

On XX XXX 20XX the Court ordered that Person A, Person B, and Person C step back as executors and Lawyers F would apply for grant of administration.

On XX XXX 20XX Lawyers E's intent to apply was advertised.

On XX XXX 20XX probate was granted to Lawyers E.

On XX XXX 20XX Lawyers D sent an email to Lawyers E that requested information about whether the administrator intended to sell the property on account of Person A's right to reside ending on XX XXX 20XX.

On XX XXX 20XX Lawyers E sent a letter sent to the beneficiaries noting that the period for the offer to made to Person A to purchase the property has lapsed and also noting Person B's allegations against Person A.

On XX XXX 20XX the tile of the property is transferred from the deceased to the Legal Personal Representative of the estate.

On XX XXX 20XX Lawyers B responded to the letter from Lawyers E and advise that the option for Person A to purchase the property has not lapsed as it was never triggered and disputing the allegations made by Person B.

On XX XXX 20XX Lawyers D sent an email with the advice that they would seek instructions from their client following the Christmas break.

On XX XXX 20XX Lawyers D replied to Lawyers E to agree that the option had not been triggered, and that an offer ought to be made as soon as possible however they disputed the date of the market valuation. They provided further particulars of Person B's allegations against Person A.

On XX XXX 20XX a telephone call took place between Lawyers E and Lawyers D.

On XX XXX 20XX Lawyers D sent an email to advise that Person B was going to further investigate some of the matters raised and provide instructions.

On XX XXX 20XX a letter was sent by Lawyers D to Lawyers E detailing a dispute regarding the offer and the date of the market valuation and also disputing some of the chattels of the estate.

On XX XXX 20XX Lawyers D sent an email asking for an administration account.

On XX XXX 20XX Lawyers E sent an email to Lawyers D enclosing the administration account and noting a missing attachment to the XX XXX 20XX letter.

On XX XXX 20XX Lawyers E sent a letter to all parties that proposed new structure to allow the sale of the Property.

On XX XXX 20XX Lawyers B sent a letter to all parties that made a counteroffer.

On 14 XX XXX 20XX Lawyers D sent an email confirming receipt of the letter and advising they would seek instructions from their client.

On XX XXX 20XX Lawyers E were provided with a copy of the 20XX income tax return from Accountants A.

On XX XXX 20XX Lawyers E were provided with the Bank A details from Bank A's Share Investing.

On XX XXX 20XX LAWYERS D sent a letter to all parties making a counteroffer.

On XX XXX 20XX Lawyers E sent a letter to Lawyer A seeking clarification about breakdown in relation that lead to the delay in obtaining probate.

On XX XXX 20XX Lawyers E sent an email to Counsel regarding a conflict to accept brief and the response from counsel was no capacity.

On XX XXX 20XX a curbside appraisal was obtained from Estate Agency A.

On XX XXX 20XX Lawyers E sent a letter to all parties reiterating the need to resolve the dispute rather than see the estate diminished by legal fees and advising that an application will be made for judicial advice regarding the offer to Person A. It also reiterated that Person Bs allegations are yet to be substantiated with evidence.

On XX XXX 20XX Lawyers B sent a letter to all parties that set out Person A's position on all issues raised.

On XX XXX 20XX Lawyers B sent a letter to all parties that proposed an offer of settlement.

On XX XXX 20XX an email was sent to and a reply received regarding brief to Counsel to advise.

On XX XXX 20XX Lawyers D sent a letter to all parties that rejected the settlement offer, continued the dispute over the chattels, and advised that evidence was being sought and gathered regarding Person B's allegations against Person A.

On XX XXX 20XX Lawyers E requested Lawyers A's file for the estate to determine whether a rectification application could be viable.

On XX XXX 20XX Lawyers B sent a letter to all parties in respect of the chattels issue.

On XX XXX 20XX Lawyers E sent a follow letter for the estate file.

On XX XXX 20XX Lawyers B sent a letter to all parties in respect of the chattels issue.

On XX XXX 20XX Lawyers D sent a letter to all parties in respect of the chattels issue.

On XX XXX 20XXa letter was sent to follow up on the estate file.

On XX XXX 20XX a letter was sent to follow up on the estate file.

On XX XXX 20XX an email was sent by Lawyers D regarding the chattels issue.

On XX XXX 20XX the estate file was provided.

On XX XXX 20XX a Brief was provided to Counsel regarding the rectification application and/or application pursuant to r54.02 of the Supreme Court General Civil Procedure Rules 2015.

On XX XXX 20XX a preliminary email of advice was received from Counsel and an offer to confer.

On XX XXX 20XX parties were in conference with Counsel

On XX XXX 20XX a foundation letter was drafted as recommended by Counsel.

On XX XXX 20XX a settled foundation letter was provided by Counsel to Lawyers E who then sent a letter to all parties. This advised that Lawyers E:

•                     Had no power under the will to offer to sell the property to Person A

•                     That any application for rectification of the will was unlikely to be successful

•                     That it was uncertain if the court had any comparable power under section 63 of the Trustee Act 1958 to allow an offer to be made, and

•                     Barring any agreement being reached between the parties, the property would be placed on the market for public sale.

The letter also asked if evidence was going to be provided to substantiate Person Bs allegations against Person A and if the issue with the chattels had been resolved.

On XX XXX 20XX Lawyers B sent a letter to all parties advising they were seeking instructions from their client regarding the property, that the client continued to dispute Person B's allegations, and that the client's stance regarding the chattels of the estate remained the same.

On XX XXX 20XX Lawyers D sent a letter to all parties advising that their client agreed with the proposed application to the court regarding sale of the property and that they were willing to participate in mediation. Discussion over the chattels continued.

On XX XXX 20XX Lawyers B sent a letter to all parties stating that their client intended to pursue their right under the will to receive an offer to buy the property. The letter further stated that their client felt the issues with the chattels to be closed and that they believed the best option was to proceed to court.

On XX to XX XXX 20XX a number of emails were exchanged between Lawyers b and Lawyers D regarding the chattels dispute.

On XX XXX 20XX Lawyers D sent a letter to all parties with disputes on chattels, the property, and the allegations made by Person B ongoing.

On XX XXX 20XX Lawyers B sent a letter to all parties with all disputes ongoing.

On XX XXX 20XX Lawyers D sent an email regarding chattels missing for collection.

On XX XXX 20XX Lawyers B sent an email regarding chattels missing for collection.

On XX XXX 20XX Lawyers D sent an email to all parties to enquire if the r54.02 application had been made.

On XX XXX 20XX Lawyers E sent a letter to all parties with a copy of the curbside appraisal attached, noting the continued dispute over Person Bs' allegations and putting forward a proposal in respect of the property and the offer to be made to Person A.

On XX XXX 20XX Lawyers B sent a letter to all parties putting forward their own settlement proposal. The offer was open for acceptance until XX XXX 20XX.

On XX XXX 20XX Lawyers E sent an email seeking an extension of the deadline in the XX XXX letter.

On XX XXX 20XX Lawyers B sent a reply email accepting the extension.

On XX XXX 20XX Lawyers D sent an email rejecting the offer in the XX XXX letter.

On XX XXX 20XX Lawyers D sent an email clarifying their instructions.

On XX XXX 20XX Lawyers D sent a letter to all parties advising that Person B was unwilling to settle on the issue of the offer to be made to Person A until such time as the administrator of the estate had investigated their concerns that had been raised.

On XX XXX 20XX Lawyers B sent a letter to all parties regarding all disputes still ongoing.

On XX XXX 20XX Lawyers E sent a letter to all parties advising they will not be investigating any historical claims for where the deceased was still alive and had decision making capacity. Further that any proposal put forward would not work without agreement on the sale of the property. The letter advised an application would be made pursuant to Order 54.

Person B changed solicitors from Lawyers D to Lawyers F.

On XX XXX 20XX Lawyers F made a telephone call advising their firm now acted for Person B and they were reviewing the file.

On XX XXX 20XX Lawyer F sent an email advising he is awaiting instructions from Person B.

On XX XXX 20XX Lawyers B sent an email enquiring as to the delay.

On XX XXX 20XX Lawyers B received an email explaining delay and noting the engagement of Lawyers F.

On XX XXX 20XX Lawyers F sent a letter to all parties making a settlement offer.

On XX XXX 20XX Lawyers B sent a letter to all parties making a counteroffer.

On XX XXX 20XX Lawyers E sent a letter to all parties in respect of the offers made.

On XX XXX 20XX Lawyers B sent a letter making a counteroffer.

On XX XXX 20XX Lawyers F sent a letter making a counteroffer.

On XX XXX 20XX Lawyers B sent a letter making a counteroffer.

On XX XXX 20XX Lawyers F made a telephone call requesting further information regarding the investigations. An email was sent to another law firm to obtain the practice file to assist with addressing Person B's concerns.

On XX XXX 20XX Lawyers B sent an email about some of the chattels.

On XX XXX 20XX Lawyers F sent a letter regarding the chattels.

On XX XXX 20XX Lawyers F sent a letter making an offer.

On XX XXX 20XX Lawyers B sent a letter making a counteroffer.

On XX XXX 20XX Lawyers E sent a letter to all parties in respect of the offers made.

On XX XXX 20XX Lawyers B sent a letter to all parties regarding the final matters of agreement.

On XX XXX 20XX Lawyers F sent a letter to all parties regarding the final matters of agreement.

On XX XXX 20XX a Draft Deed is circulated by Lawyers B to all parties.

On XX XXX 20XX a solicitors conference was held to work through minutiae in the Draft Deed.

On XX XXX 20XX to XX XXX 20XX all solicitors were receiving Instructions from their clients in respect of the Deed.

On XX XXX 20XX a marked up version of the Deed was circulated by Lawyers E.

On XX XXX 20XX a marked up version of the Deed was circulated by Lawyers F.

On XX XXX 20XX a marked up version of the Deed was circulated by Lawyers B.

On XX XXX 20XX Lawyers F sent an email with queries regarding the Deed.

On XX XXX 20XX a copy of the Deed with further markup was circulated by Lawyers B.

On XX XXX 20XX Lawyers E sent an email to all parties proposing some changes following the email of XX XXX 20XX.

On XX XXX 20XX a copy of the Deed was circulated by Lawyers B that incorporated the changes.

On XX XXX 20XX the draft Deed was circulated by Lawyers F.

On XX XXX 20XX Lawyers E sent an email regarding some of the changes proposed by Lawyers F.

On XX XXX 20XX Lawyers B sent an email in response to the email above.

On XX XXX 20XX Lawyers F sent an email regarding the separate parties influencing valuers.

On XX XXX 20XX Lawyers E sent an email to all parties suggesting that the three valuers can be selected by Lawyers E if the parties were unable to agree.

On XX XXX 20XX Lawyers B sent an email regarding valuer identity and transparency.

On XX XXX 20XX an updated Deed was circulated by Lawyers F.

On XX XXX 20XX an updated Deed was circulated by Lawyers B.

Between XX XXX 20XX and XX XXX 20XX emails were exchanged about minutiae in the Deed.

On XX XXX 20XX the Deed was signed by all the parties.

On XX to XX XXX 20XX valuations were obtained.

On XX XXX 20XX an offer to purchase the property was made to Person A. They had X days to respond.

On XX XXX 20XX Person A declined the offer.

On XX XXX 20XX Person A vacated the property in accordance with the Deed.

On XX XXX 20XX to XX XXX 20XX a real estate agent was engaged and the property was cleaned and prepared for sale.

On XX XXX 20XX the property was listed for sale.

On XX XXX 20XX an acceptable offer was received.

On XX XXX 20XX the contract became unconditional.

On XX XXX 20XX settlement took place.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195

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