Edited version of private advice

Authorisation Number: 1052023601172

Date of advice: 19 August 2022

Ruling

Subject: Commissioner's discretion - deceased estate

Question

Will the Commissioner exercise the discretion to allow an extension of time for you to dispose of your ownership interest in the property and disregard the capital gain or capital 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 ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

The deceased obtained an ownership interest a property after 20 September 1985 as the sole owner.

The deceased passed away.

The property was the deceased's main residence just before they passed away. The deceased resided with a friend prior to passing away.

The deceased made a formal Will appointing their sibling as the sole executor and beneficiary.

Shortly after the deceased passed away, a notice of claim against the deceased's estate was made by the friend, who produced photographs of an alleged informal Will signed by the deceased.

An investigation was conducted to ascertain whether the informal Will had testamentary significance.

A few months later, the friend advised they would no longer oppose the application of probate of the formal Will.

The application for probate was prepared and probate was granted.

The friend made a claim on the estate approximately four months after probate was granted. Affidavit materials were not lodged until 2-3 months after the claim was made.

The sibling was preparing a response to the claim when they passed away suddenly.

The probate for the sibling's estate was granted and the executors appointed to administer the sibling's estate were substituted as the defendants for the claim against the deceased's estate.

The friend filed a number of affidavits over a four month period, after substitute defendants were appointed.

The friend requested an adjournment of proceedings. The court had re-arranged a new trial date.

Both parties reached an agreement and a settlement was finalised.

The friend continued to reside in the property after the deceased passed away until they vacated the property. The property was then left vacant until it was sold.

The friend vacated the property shortly the settlement agreement was finalised and the executors engaged a buyer's advocate.

A real estate agent was appointed and was engaged to market the property. Work was also undertaken to clean and style the property.

The property was sold and settled.

The property was situated on less than 2 hectares.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 104-10

Income Tax Assessment Act 1997 section 118-195