Edited version of private advice

Authorisation Number: 1051872082375

Date of advice: 22 July 2021

Ruling

Subject: Commissioner's discretion to extend the two-year time limit to dispose of an inherited house

Question

Will the Commissioner allow an extension of time to mid-2021 for you to dispose of your ownership interest in the house 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 2021

The scheme commences on:

1 July 2020

Relevant facts and circumstances

In 20XX, the deceased was first registered on the title of the house. It remained their principal place of residence from the date of acquisition until the date of their death in early 20XX.

In mid-20XX, the executor of the estate lodged an application for Probate. A Caveat was lodged in relation to the will, by a relative of the deceased, who subsequently lodged grounds of objection to the grant of probate.

In late 20XX, the caveator filed a Summons for Directions with the Supreme Court of their state. Shortly after, the court heard the matter and made direction orders. There were several administrative adjournments of the matter. Later, the matter came back before the court, by which time the parties had made considerable progress towards a resolution of the issues in dispute. The matter was then adjourned to early 20XX. The parties reached agreement and signed Terms of Settlement.

In early 20XX, the court heard the matter and directed that a Withdrawal of Caveat be filed with the Probate Office. Shortly after, a notice discontinuing the application for probate was filed with the Probate Office, thus effectively ending the application for probate made on behalf of the executor of the estate.

Later, in accordance with the Terms of Settlement agreed between the beneficiaries of the estate, an independent administrator (the Administrator) made an application for Letters of Administration of the estate, with the Will annexed. The affidavit and other documents required to be lodged with the court were prepared and forwarded to the Administrator for swearing.

In mid-20XX, the documents were lodged with the Registrar of Probates by post. Shortly after, the Registrar issued a requisition in relation to the application, requiring the substituted executor (the other beneficiary) to renounce their right to apply for probate of the will. A renunciation was prepared and forwarded to the other beneficiary's lawyer, as the signature of the renunciation needed to be verified by an affidavit made by their lawyers.

Later, the renunciation was filed with the Registrar of Probates. The Administrator obtained a Grant of Letters of Administration with the Will Annexed. The title for the property was held by the lawyers acting for the other beneficiary, who required written authorisation to release the title.

The Administrator wrote to the other beneficiary's lawyer seeking details as to who was in occupation of the property and other details concerning rates, insurance and seeking a time to assess the property. The lawyer advised they were no longer acting for the other beneficiary. Consequently, the Administrator met with the other beneficiary to view the condition of the property.

The Administrator spoke to the vendors advocate and advised the estate solicitor as to meeting at the property and discussed that nothing will happen for six weeks because of the COVID-19 lockdown.

During this time, the Administrator appointed the vendors advocate to manage the sale of the house.

In late 20XX, the other beneficiary met with the vendors advocate and the agents at the property where they agreed on early 20XX for marketing the house. During this period, the other beneficiary finalised the clearing of the house and tidying of the garden. During the period of lockdown this was not able to be attended to as it was not a valid reason for them to leaving home.

In early 20XX, the house was made available for sale and sold a short time later.

The sale of the house was settled within two years and one month after the deceased passed away.

Relevant legislative provisions

Income Tax Assessment Act 1997 subdivision 115-A

Income Tax Assessment Act 1997 section 102-20

Income Tax Assessment Act 1997 section 104-10

Income Tax Assessment Act 1997 section 118-120

Income Tax Assessment Act 1997 section 118-130

Income Tax Assessment Act 1997 section 118-195