Edited version of private advice

Authorisation Number: 1051740825124

Date of advice: 20 August 2020

Ruling

Subject: Capital gains tax and deceased estates

Question

Will the Commissioner exercise the 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 for disposal of the property?

Answer

Yes. Having considered the circumstances and the relevant factors, the Commissioner is able to apply the discretion under subsection 118-195(1) of the ITAA 1997 and allow an extension of time. Further information about the discretion can be found on our website ato.gov.au and entering QC52250 into the search bar at the top right of the page.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

The property was acquired in 19xx by the deceased and spouse as joint tenants. This property has remained as the main residence of both until both of their deaths.

In 19yy, the deceased's spouse passed away, leaving the property in the name of the deceased.

In 20aa, the deceased passed away in country A, as this is where their children live.

Following the death of the deceased, it was discovered that the deceased had a Will made in recent times in country A as well as an Australian Will made over many years ago. The executors of the deceased estate subsequently sought legal advice in Australia and in country A, as to which one was applicable.

In 20bb, the executors of the deceased estate contacted solicitors in Australia who drafted the original Will.

In the same year, contact was also made with two other solicitors inquiring whether they could assist in processing probate in Australia with a foreign will.

In the same year, one of the executors of the deceased estate met with solicitors in Australia to discuss which Will was applicable and what procedure to follow to apply for probate in Australia. No successful engagement was reached with the solicitors at that time.

Following this, application for probate with the Probate Office in Australia took some time in order to understand the correct procedure to be followed and documents required to get probate. It was also necessary for the executors to apply for probate in country A first, prior to being able to process with the probate application in Australia.

In 20cc, contact with the Probate Office in Australia was made and a list of required documents and method of certificate was provided.

During the process of applying the probate in Australia, all relevant documents had to be translated into English by a sworn translator and all of them certified by a country A Notary. The country A authorities had some difficulty in understanding the requirements of the Australia Probate Office.

In 20cc, an Australian solicitor (solicitor of a trusted friend of the deceased family) was engaged to act on the behalf of the executors of the deceased estate.

All necessary documents were arranged to be translated and appropriately certified and apostilled.

In 20dd, confirmation was sought and received from the bank which held title over the property.

In 20ee, all correctly certified documentation to apply for probate was mailed to Australia.

In the same year, probate was officially granted to the executors of the deceased estate.

Later the Certificate of Title of the property was received from the bank.

Current tax agent was contacted to seek advice on the sale of the property.

The property has remained a vacant property since the death. It has not been available for rent. The executors of the deceased estate have at their own expense kept the property in reasonable condition.

A tax file number (TFN) of the deceased estate was issued. However, previous tax agent did not forward the TFN to current tax agent nor to the executors. Only some years later, the executors had been able to find the TFN.

One of the executors was with trying to obtain her TFN from Australia as her surname in country A is different to her married name in Australia which was used to apply for her TFN.

Since 20bb, one of the executors became seriously ill and had been undergoing treatment through to 20gg.

There have also been other personal issues during this time. The executor only had time to travel to Australia very recently.

The auction was held shortly after and the property was sold and settled.

Relevant legislative provisions

Income Tax Assessment Act 1997 subsection 118-195(1)