Edited version of private advice

Authorisation Number: 1051595648820

Date of advice: 17 October 2019

Ruling

Subject: Commissioner's discretion to extend the two year period to dispose of an inherited dwelling

Question

Will the Commissioner exercise his 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. After reviewing the information provided and having considered your circumstances and the relevant factors, the Commissioner will allow an extension of time.

Further information about this discretion can be found by searching 'QC 52250' on www.ato.gov.au

This ruling applies for the following periods:

Income year ending 30 June 20XX

Income year ending 30 June 20XX

Income year ending 30 June 20XX

Income year ending 30 June 20XX

The scheme commences on:

30 September 20XX

Relevant facts and circumstances

Your sibling, Person A, acquired the Property after 20 September 1985.

Person A (the Deceased) resided at the Property until they passed away many years later at the Property.

The Deceased passed away intestate, and did not have any spouse or children, and had lived alone for many years with the Property being in a decrepit state.

You had been severely ill at the time the Deceased passed away and had been in hospital at that time.

The police came to the hospital and notified you of the passing of the Deceased as their closest next-of-kin in the month after the Deceased had passed away.

You were discharged from hospital after a short time but continued to need in home medical assistance and rehabilitation.

During the following months you:

·         engaged the services of a cleaning firm to clean and sanitise the Property, searching and gathering documentation during the process. You were not allowed to access the Property due to the risk of infection

·         contacted an internet provider in relation to gaining access to the Deceased's email account and address book to assist you in finding the Deceased's associates, without success.

·         sought legal advice and had meetings with various providers of legal services who declined to assist you with the matter.

Due to the incorrect spelling of the Deceased's name, the final death certificate was not issued for a number of months after the Deceased had passed away.

You engaged the services of a legal firm in the same month that the final death certificate was issued

During the following months you:

·         undertook research and corresponded with various organisations to obtain birth certificates and death certificates of your late parents, who had been born and had passed away in the an overseas country, as you had been advised that you required them to obtain the Letters of Administration; and

·         contacted various banks to determine if the Deceased had any accounts with them and were able to determine that they had accounts numerous banks.

You were advised that a search for any wills or testamentary dispositions were required by the court for the Grant of Letters and you engaged information technology companies to assist you in accessing the Deceased's computers. However, no relevant files were found.

In the following month you engaged the services of specialists to value items owned by the Deceased as required for the Grant of Letters of Administration.

You corresponded and met with your legal representative over a period of months in relation to the preparation of applying to the court for the Letters of Administration.

The application for the Letters of Administration was filed with the Court who requested further documentation.

During the following month you dealt with public officials in the country where your parents had lived to obtain their Death Certificates, which you had received during the same month.

In the following month you changed legal practice due to your legal representative leaving the original legal practice which resulted in you having to deal with a new legal representative.

Your parent's Death Certificates did not meet the Court's requirements and you undertook research and corresponded with various departments in the overseas country in an endeavour to obtain them. However, you established that you needed to engage a party located in the overseas country to obtain the relevant documentation.

You contacted multiple overseas parties before engaging a firm to source the relevant documentation just prior to the Christmas period.

You received documentation from overseas during the following month but it was not correct and in the following month you had contacted the overseas firm to have the documents corrected.

In the following month you engaged the services of a translator to translate the documentation, with the translations requiring amendments.

After a number of months you sent a hard copy of all of the documentation required by the Court and the translated documentation to another sibling (Person B) who resides oversea for them to execute and sign.

During the same month you received the signed documents signed by Person B, but the documentation required to be signed by the Court had not been signed correctly, and the instructions were not fully followed.

Later in the same month the documents were resent to your sibling for them to sign which were returned to you within a short time and were provided to your legal representative to file with the Court.

You spoke to numerous real estate agents in relation to the sale of the Property after you had received the formal Grant of Letters of Administration.

Almost two years after the Deceased had passed away, the documents were filed with the Court.

The Grant of Letters of Administration were issued by the Court nearly two years after the Deceased had passed away and you began the administration of the Deceased's estate and having the Property transferred into your name as the Administrator of the Deceased's Estate so that you could sell it.

You have selected a real estate agent to sell the Property and anticipate engaging their services shortly.

You are waiting for a prescribed vendor disclosure document before the contract of sale of the Property can be finalised in preparation for the Property being marketed.

It is anticipated that the Property will be auctioned prior to the end of the year, being more than two years after the Deceased had passed away, but the exact date has not been finalised at this point.

For the purposes of this ruling the following will occur during the period covered by the ruling:

·         the Property will be sold at auction, and if not it will be sold by private treaty; and

·         a capital gain will be made on the sale of the Property.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 104-10

Income Tax Assessment Act 1997 subsection 118-130(3)

Income Tax Assessment Act 1997 section 118-195