Edited version of private advice

Authorisation Number: 1051949132460

Date of advice: 16 February 2022

Ruling

Subject: CGT - deceased estates

Question

Will the Commissioner allow an extension of time for you to dispose of your ownership interest in the Dwelling and to disregard the capital gain or loss 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

When selling your home you can claim the main residence exemption from capital gains tax (CGT) for up to two hectares of the land your home is on.

If your land is used for private purposes and is greater than two hectares, you can choose which two hectares are exempt. The rest is subject to CGT.

This ruling applies for the following periods:

Year ended 30 June 20XX

The scheme commences on:

1 September 20XX

Relevant facts and circumstances

The Deceased owned a property which was acquired before 20 September 1985. The Deceased lived in the Dwelling as their main residence.

The land exceeded two hectares in size.

The Deceased moved into a nursing home a number of years before they died. The Dwelling was left vacant in their absence.

The Deceased passed away.

The Deceased died without a will. They were never married and had no children.

The Estate had to be administered under the law of intestacy in the relevant state.

The Deceased was survived by three siblings (the Siblings) Sibling A, Sibling B and Sibling C.

On XX March 20XX, on behalf of the Siblings, a Solicitor contacted an independent company to administer the Deceased's estate. However, they refused.

On XX June 20XX State Trustees Limited (STL) was contacted instead, to accept the administration of this estate.

To enable STL to administer the estate of the Deceased, STL needed authority from the Siblings and agreement to the sale of the Dwelling which was necessary to cover the costs of administration.

The Authority to act was provided by the Siblings and received by STL in March-April 20XX.

On XX September 20XX STL applied and was granted Probate of Administration.

The Dwelling had been in the Deceased's family for a significant period and caused a family dispute between the Siblings. While Sibling B and Sibling C wanted to sell it on the open market, Sibling A was keen to keep it in the family and wanted to purchase it.

Sibling B and Sibling C were not willing to sell to Sibling A unless it was sold on the open market and Sibling A was able to bid or provide a suitable offer.

There are 13 beneficiaries and the estate needed to discuss the matter with all the parties before proceeding. The beneficiaries could not agree with each other and so there was no progression of the estate despite STL's willingness to proceed.

STL discussed these matters in a phone call with the beneficiaries on various occasions separately seeking their authority over a period of five months.

Further, there were written communications explaining the procedure to the beneficiaries on numerous occasions during that same period.

On the basis that no one could agree, STL made a decision as the Administrator to put the Dwelling on the market. Sibling A was not precluded from making an offer of purchase.

STL cleaned and cleared the land attached to the Dwelling of fire hazard, secured it and obtained the valuation. STL also engaged with relevant state authorities to clear all the property dues and obtained the necessary clearance certificate.

STL immediately took possession of the Dwelling and commenced its process to put it on market. STL had to consistently engage with the beneficiaries regarding the sale of the property and Sibling A was insistent on buying the property.

STL obtained a sale appraisal in May 20XX and appointed a Real Estate Agent to sell the Dwelling in July 20XX.

The sale contract was drawn, and Dwelling was listed for sale shortly after.

The Dwelling was sold in a matter of weeks. Settlement of the Dwelling was completed four years after the Deceased's date of death.

A capital gain was made on the sale.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 104-10

Income Tax Assessment Act 1997 section 118-195