Edited version of private advice

Authorisation Number: 5010095012645

Date of advice: 12 September 2023

Ruling

Subject: Commissioner's discretion - extension of time extension of time

Question

Will the Commissioner exercise discretion under subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) and allow an extension of time to the two-year period?

Answer

Yes. Having considered the relevant facts, the Commissioner will apply his discretion under subsection 118-195(1) of the ITAA 1997 and allow an extension to the two-year time limit until the settlement date.

This ruling applies for the following period:

Year ending 20XX

The scheme commenced on:

1 July 2018

Relevant facts and circumstances

The property was bought by the deceased and spouse almost 40 years ago.

The property was transferred into the deceased's sole name after the passing of spouse.

The deceased died X years before the property was sold.

The named executors failed to make any application to the Court for a grant of probate resulting in the estate not being administered. One of the named executors resided in the property with their children.

Proceedings were first issued on 18 months after the date of death by other family members who were not the named executors against the executors named in the Will.

A third party was appointed as independent administrator and the executors named in the will were removed from their role.

Orders were made on the administrator to apply for a grant to administer the Estate. An application had to be made to the Registrar of Probates to issue the grant. Until the grant, the administrator had no right to sell the house or deal with the estate property.

The grant was made in June 20XX (based on a provisional inventory of assets), but the administration was hampered by the lack of information provided by the executors about the assets and liabilities of the estate.

Approximately two years after the date of death, the Administrator was able to ascertain that the Estate was cash insolvent, and a notice was sent to the occupants to vacate the property.

Two of the children of the deceased issued proceedings in relation to the will. This further delayed the sale of the house due to entitlement to the property under the will and other matters before the Court. This prevented the sale of the property as the administrator was no longer able to remove the occupant of the property pending the resolution of their claim. Another letter was sent to the occupants to vacate just before X years post date of death.

The court proceedings were resolved at mediation, but the settlement was subject to Court approval. Court orders approving the settlement were made at X years post date of death. The delay between then and the marketing campaign were due to the extensive clean up required at the property.

As soon as practical the property was listed and placed on the market.

The property sold at auction and settlement occurred 4 years post date of death.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118 - 195

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