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Edited version of private advice
Authorisation Number: 1051618179337
Date of advice: 10 December 2019
Ruling
Subject: Capital Gains Tax
Question
Will the Commissioner allow an extension of time for you to dispose of your ownership interest in the properties and disregard the capital gain you make on the disposal?
Answer
Yes.
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 ato.gov.au
This ruling applies for the following period:
Year ended 30 June 2018
The scheme commences on:
1 July 2017
Relevant facts
The deceased passed away in 20xx.
The deceased owned four properties. One was left to a child in the will, one was left to the spouse of the deceased and was their main resident until death. The other two were left to a testamentary discretionary trust to the family and their descendants. Both these properties were sold by the Estate in 20xx. They were sold for land value only. It is these two properties that are subject to this ruling.
The deceased purchased these two properties prior to capital gains tax legislation.
The two properties each had a dwelling on the land.
After the death of the deceased, the spouse suffered from a serious medical condition but once relatively well enough gathered the required information about the Estate and attended a court house to complete and sign documents for an application for Probate of the deceased's will in which they were named sole executor.
The documents were apparently found to be incomplete and required amendment. The court issued a Requisition but the spouse does not recall having received it and presumed it was never delivered.
The spouse assumed that the various legal requirements of the estate had been completed. Nothing else was done further in relation to the administration of the estate and the subsequent collection of the assets and distribution in accordance with the will. The spouse received a reprinted Requisition some time later.
Following this and urging from family members to resolve the Estate, the spouse engaged with solicitors which after preliminary investigation and without notice of the Requisition, obtained real-estate evaluation in order to apply for a grant of probate.
The firm encountered difficulty in obtaining the grant of probate so referred the spouse to lawyers who then engaged accountants.
Following extensive enquires by the lawyers and gathering of additional information a grant of probate was made to the spouse on 20xx.
Part of the problem was also one of the titles to the estate and family properties were retained at the home and the lost deeds were only replaced when the titles were transferred.
There was legal advice to the spouse that the "trust" was too vague to be implemented and therefore there was a partial intestacy under the will, and the beneficiaries for those assets were the spouse and children pursuant to Section 61B of the Probate and Administration Act 1898.
The division of the estate was confirmed by the three parties as beneficiaries in a Deed under which the spouse received the prescribed amount and one half of the remainder and the other half were divided between the children.
Once probate was granted, the children and spouse of the deceased sought legal advice to the administration of the estate. The children were prepared to leave the estate and the distribution of the estate to spouse of the deceased and acquiesced with the sale of the properties when the titles were transferred to the spouse after Probate had been granted.
Some rental was received by the deceased from one of the properties prior to the death but presumes it was disclosed in their income tax returns. All the properties sat idle and no income was derived after the death while our client was awaiting action by the Court in making the grant of Probate.
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