Edited version of private advice

Authorisation Number: 1051937797071

Date of advice: 12 January 2022

Ruling

Subject:Commissioner's discretion - deceased estate

Question

Will the Commissioner allow an extension of time 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 66057' on ato.gov.au.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

At some time before 1985, the deceased and their spouse built the house.

In 20XX, the deceased's spouse passed away and the deceased acquired their 50% ownership interest in the house.

In late 20XX, the deceased passed away. The house was the deceased's main residence until they moved into aged care XXX weeks before they passed away. The co-executors chose to treat the house as the deceased's main residence during this period.

Probate was initially due in mid-20XX. Executor A had signed the probate documents. However, Executor B delayed signing them. Executor A's solicitor arranged an affidavit to require Executor B to sign the probate documents. Probate was granted a few weeks later.

During this time Executor A experienced difficulty in negotiating with Executor B the need and cost of remedial work required to bring the property to compliance for council regulations for sale, and general clean-up and clean-out costs.

From July to October 2020, COVID-19 restrictions prevented Executor A from visiting the property to do any work.

All work was carried out by Executor A and their family. Executor B and their family were unwilling to assist. It was a XXkm round trip to visit the property, so they could only do work on weekends and when they had available holiday time.

Executor A organised a builder to quote on the repairs that required a qualified tradesman to facilitate.

In early 20XX, Executor A submitted a revised quotation to Executor B and requested their approval for commencement of remedial work. Two months later, Executor B sent their approval. The delay caused the work to be rescheduled to mid-20XX. Due to material shortages, the builder commenced work a month later than expected.

In mid-20XX, COVID-19 restrictions prevented the builder from completing the work. Executor A's solicitor advised by e-mail that they could no longer act as the solicitor for the estate and withdrew their services. This was due to conflict between Executor B's spouse and the solicitor.

Executor A contacted a lawyer, for legal advice and directions to proceed with the execution of the estate.

A short time later. Executor A appointed a new solicitor as their legal representative and conveyancer. Executor A received advice that they could travel to the property to effect repairs and clean-up which was completed within two months.

A short time later, the house was put on the market and sold within XX month.

The house settled about five weeks after the two-year period expired.

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