Edited version of private advice

Authorisation Number: 1051876858153

Date of advice: 2 Aug 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-20XX 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 periods:

Year ended 30 June 20XX

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

At some time before 1985, the deceased bought the house. It was the deceased's main residence for their entire ownership period until they passed away.

About XX years ago, the deceased's will appointed Executor A and their spouse as joint executors of the estate.

About XX years ago, Executor A's spouse passed away.

About XX years ago, the deceased passed away. Shortly after, Beneficiary A and relative of the deceased, who lives overseas, contacted Relative A (relative of the deceased) to inform them that the deceased had passed away and asked them to locate a will. All beneficiaries lived outside Australia and spoke little or no English. Relative A and their two siblings were the only relatives of the deceased in Australia. Relative A, a solicitor, never acted on behalf of the estate but was asked by Beneficiary A to assist with the administration of the estate.

Relative A contacted the deceased's bank's deceased estates section who advised that they should visit the branch which held the safety deposit box.

Relative A attended that branch, however the bank officer refused to reveal anything about the contents of the box. They stated that it contained what appeared to be a will. They refused to provide them with a copy of the will.

Relative A wrote to the bank requesting a copy of the deceased's will.

In early 20XX, Relative A lodged a dispute with the Financial Ombudsman Service seeking to know at least the name of the executor nominated in the will.

The bank wrote to Relative A refusing their request and stated the bank was unable to provide them with the name of the executor nominated in the will.

Shortly after, the bank wrote to Relative A in response to the dispute and advised that the executors stated in the will were; Executor A and their spouse (deceased). Relative A spoke to the bank who advised they had sent a letter to Executor A in relation to the will held by the bank.

Relative A called Executor A's child who did not allow him to speak to Executor A. Relative A advised that Executor A was nominated as an executor and that they should attend the bank to obtain the will or at least a copy of the will. Relative A asked for a copy of the will to provide to Beneficiary A. Executor A's child refused to assist Relative A in any way.

Relative A wrote to Executor A asking them to either apply for probate of the will or to renounce probate, failing which Relative A could take further action and make an application to court to resolve this impasse.

Beneficiary A attended Relative A's office and handed them a copy of the will. Beneficiary A had also visited Executor A; however, they had refused to discuss any related matters. Relative A advised Beneficiary A to seek a court order removing Executor A and appointing a substituted executor.

Relative A and Beneficiary A met with a solicitor who agreed to act for Beneficiary A.

In mid-20XX, Relative A called the solicitor for an update. The solicitor stated that there had been no activity in relation to the estate since they had been appointed.

In late 20XX, Relative A called the solicitor who said they had spoken to the Registrar of Probates, but they had still received no communications from Executor A.

In early 20XX, Relative A called the solicitor (after numerous unsuccessful attempts) who stated that they had made further inquiries with the Registrar of Probates and explained that Beneficiary A had no standing to seek probate. Only the four residuary beneficiaries could seek probate.

Relative A spoke to Beneficiary A and advised them of the discussion with the solicitor. Beneficiary A said they would try to obtain an acknowledgement from the four residuary beneficiaries to apply for probate of the will.

During the next X months, Relative A had various communications with Beneficiary A who explained they were having some trouble obtaining the approval of four residuary beneficiaries. Relative A provided the solicitor with an update and explained that several residuary beneficiaries were elderly and might have to apply for probate under a power of attorney. Furthermore, at least one of the residuary beneficiaries had died. The solicitor insisted that an application for probate could not proceed unless four residuary beneficiaries applied for probate.

In mid-20XX, Beneficiary A contacted Relative A to state that they were still trying to find appropriate persons who would be willing to apply for probate. Relative A corresponded further with relatives of beneficiaries over the next month in order to finalise four residuary beneficiaries who might be willing to apply for probate.

Relative A called Executor A's child, who stated that Executor A had received correspondence from the solicitor advising further action if Executor A did not seek probate or renounce probate. Relative A again suggested that if Executor A wished to apply for probate, they had to obtain the original will from the bank. Relative A advised the solicitor of the discussion with Executor A's child. Executor A's child called Relative A seeking further information about the role and duties of an executor.

Relative A called Executor A's child who advised they had not obtained the original will from the bank. Executor A's child stated that Executor A was not willing to act as executor and would sign the Renunciation of Probate which the solicitor had mailed to them. Relative A advised the solicitor of that conversation.

Relative A attended Executor A's home and witnessed their execution of the Renunciation of Probate. Relative A advised the solicitor of this. During the next month, Relative A had various communications with Beneficiary A and other relatives of some of the beneficiaries of the estate, however no residuary beneficiary was willing to apply for probate.

Relative A discussed the matter with the solicitor, and they agreed to refer the matter to Trustee Company A.

Relative A called Beneficiary A to advise them to transfer the matter to Trustee Company A since it seemed that no one wished to assume the role of executor. Beneficiary A said that they would discuss the matter with some of the beneficiaries and call Relative A back.

In late 20XX, Beneficiary A called Relative A to say that they had not reached an agreement with any residuary beneficiary and agreed to transfer the matter to Trustee Company A or another trustee company.

Relative A called the solicitor and asked them to transfer the matter to Trustee Company A.

Trustee Company A called Relative A and stated that they would email Relative A an Authority for Executor A to sign to appoint Trustee Company A as the substituted executor.

In early 20XX, after numerous unsuccessful attempts to get Executor A to sign the Authority, Relative A emailed Trustee Company B to inquire whether they would be willing to assume control of the matter.

Relative A called Trustee Company B and received confirmation that they were willing to take control of the matter and to apply for probate of the will.

In mid-20XX, Trustee Company B received the copy of title.

Beneficiary B, provided the authority to act to Trustee Company B. Trustee Company B were not able to apply for full probate due to legal issues with the handwritten will which needed to be proven in court.

In early 20XX, Trustee Company B received the limited grant order. Trustee Company B appointed a real estate agent, a valuer and a cleaner.

In mid-20XX, the real estate agent listed the house for sale, and it sold a short time later.

The house settled within four years 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