Edited version of private advice

Authorisation Number: 1051977232831

Date of advice: 25 May 2022

Ruling

Subject: Commissioner's discretion - deceased estate

Question

Will the Commissioner allow an extension of time to XX XXXX 20XX for you to dispose of your ownership interest in the dwelling and disregard the capital gain or loss you made on the disposal?

Answer

Yes. Having considered your circumstances and the relevant factors the Commissioner will allow an extension of time. Further information about the Commissioner's discretion can be found by searching ato.gov.au for 'QC 66057'.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

The dwelling was the family home of the Deceased and their spouse (The Parents), who were the parents of nine children.

The dwelling was purchased before 20 September 1985.

The dwelling size is less than 2 hectares.

The registered proprietors of the dwelling were two of the Deceased's children, Person 1 and Person 2, as joint tenants.

The Parents contributed to the purchase price and maintenance of the dwelling.

The Parents were entitled to the use, enjoyment and control of the property at all times from acquisition date until their respective deaths.

The Deceased passed away on in Spring 2017.

The Deceased's Will stated that the Deceased "had 100% true ownership" of the dwelling.

One of the Deceased's children, Person 3, was appointed as executor in their Will (The Executor).

In their Will, the Deceased left the estate equally to five of their children: Person 1, Person 2, Person 3, Person 4 and Person 5 (The Beneficiaries).

The dwelling was the main residence of the Deceased and two of their children, Person 2 and Person 4, prior to their passing.

Approximately two weeks after the Deceased's date of death, the Executor arranged for the Beneficiaries, (which included Person 2), to sign a document entitled "Siblings Agreement", wherein it was stated:

• The Beneficiaries acknowledged that the dwelling was the property of the deceased estate; and
• Person 2 authorised the co-registered proprietor, Person 1, to assist on the sale of the dwelling.

In early 20XX, Person 2 in their capacity as registered proprietor, objected to the sale of the dwelling. Person 2 contested that some portion of the property was beneficially held by them.

As Person 2 was subject to financial management, the process required approval from State A Trustee and Guardian (T&G) and there was difficulty as to Person 2's capacity and enforceability of the Siblings Agreement without financial management approval.

In Winter 20XX, the Executor procured statutory declarations from Person 1 and Person 3 reiterating their agreement, that the dwelling was only ever held as bare trustees for the Parents.

The Executor and Person 2's financial managers approached T&G and sought direct approval to sell the dwelling with T&G's direction and authorisation.

In Winter 20XX, T&G made a decision authorising Person 2's financial managers to sell the dwelling.

Person 2 sought a review of the decision made by T&G.

After conducting a review of the decision and taking into account Person 2's objections to the sale, in Autumn 20XX, T&G varied the earlier decision and granted an extension of 30 days to reconsider Person 2's contentions.

Person 1 sought a Supreme Court order in Winter 20XX to sell the property.

The Grant of Probate occurred in Summer 20XX.

A Deed of Settlement and Release was executed and final orders were made by the Supreme Court of State A in Summer 20XX.

Consent from Bank A to transfer the dwelling into the names of the Statutory Trustees was sought and a Contract for Sale was drafted in Autumn 20XX.

COVID-19 provided some additional practical delays for the Statutory Trustees to proceed with the sale of the dwelling between Autumn and Spring 20XX.

A formal right to occupy the dwelling was not included in the Deceased's will but Person 4 and Person 2 continued to reside in property until the dispute settled.

In Spring 20XX, the Executor was advised that Person 4 and Person 2 had been advising the real estate agent that they were not providing access to the property to take pictures for the advertising to enable to dwelling to be listed for sale.

The dwelling was first open for inspection in Spring 20XX.

The Executor was notified that the Statutory Trustees were to be imminently registered on title.

The dwelling was sold in Spring 20XX at auction.

Settlement occurred in Summer 20XX.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 104-10

Income Tax Assessment Act 1997 section 118-195