Edited version of private advice

Authorisation Number: 1051954201678

Date of advice: 10 March 2022

Ruling

Subject: CGT - deceased estate

Question

Will the Commissioner exercise his 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?

Answer

Yes, having considered your circumstances and the relevant factors, the Commissioner will allow an extension of time to the two-year period. Further information about this discretion can be found by entering 'QC 23846' into the search bar at ato.gov.au

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 purchased by the Deceased and their spouse after 20 September 1985 (the Dwelling).

The Deceased's spouse passed away and their share of the Dwelling was transferred to the Deceased upon their death.

A short time later the Deceased passed away.

The Dwelling was the Deceased's main residence at the time of their death.

The Dwelling was not used for income producing activities and no income has been received from the Dwelling after the passing of the Deceased.

The Will of the Deceased's estate was dated XXXX (the Will).

The Deceased had two children - Sibling 1 and Sibling 2

Under clause 2(a) of the Will, the Public Trustee was appointed the sole executor and trustee of the Deceased's estate.

Under clause 4(a) of the Will, Sibling 2 was given a right to reside in the Dwelling.

Approximately four months after the Deceased passed away probate was granted to the Public Trustee.

Nearly two decades after the death of the Deceased Sibling 2 passed away.

Sibling 2 resided in the Dwelling until their death.

Under clause 4(a) of the Will, upon the termination of the right to reside - upon Sibling 2's death, the Dwelling is given to Sibling 2's lawful spouse and/or the surviving children.

Sibling 2 did not have a lawful spouse at the time of their death.

Sibling 2 had one surviving child - Child of Sibling 2.

Shortly after Sibling 2 passed away, Sibling 1, by their then solicitors, gave the Public Trustee notice of their intention to bring a family provision application under part 4 of the Family Provision Act.

A short period later Sibling 1 commenced proceedings.

To avoid the uncertainty and expense of litigation, Sibling 1 and Child of Sibling 2 reached a compromise on the terms set out in the Deed of Compromise of all issues between them in relation to the Deceased's estate.

Approximately four years after Sibling 1 commenced legal proceedings an agreement to sell the Dwelling was reached and the follow occurred:

•         The Deed of Compromise was signed was signed by Sibling 1.

•         The Deed of Compromise was signed was signed by the Child of Sibling 2.

•         The Deed of Compromise was signed by the Public Trustee.

Shortly after the Deed of Compromise was signed the Deceased's Dwelling was sold.

A short time later settlement occurred on the property.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 104-10

Income Tax Assessment Act 1997 section 118-130

Income Tax Assessment Act 1997 section 118-195