Edited version of private advice

Authorisation Number: 1052024822835

Date of advice: 30 August 2022

Ruling

Subject: CGT - 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 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 ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

Your parent purchased a property after 1985. They were the sole owner. The property was their main residence throughout their ownership period until their death.

Your parent died in 20XX.

You and Person A were the executors to the estate.

Your parent's former spouse (Person B) died a few months before your parent. The executors to the estate were Person A and your parent.

Person B provided instructions to Person A in 20XX to amend their will to make you and Person A joint executors. Person B died before this amendment could be executed.

In 20XX your sibling (Person C) lodged a caveat preventing the application for letters of administration in relation to Person B's estate.

Complications arose in your parent's estate due to the complications of Person B's estate as the two estates became intertwined and neither estate could be resolved without an overall resolution to both estates. This includes:

-          There was an intermingling of monies between Person B and your parent's estate by Person A. There was confusion about what money had been paid and what was owing to beneficiaries of each estate.

-          Your parent provided a loan to Person B's estate as a result of Person B's property having unfinished renovations and requiring work to make it saleable. When your parent passed away soon after, this sale did not occur, and the issue of the loan was not resolved.

-          There have been various loan accounts between the two estates. Person B's estate required funds to pay legal fees and other outstanding bills. The funds were loaned by your parent's estate.

A codicil was added to your parent's will on the date of death. You believe that this was done under questionable circumstances. The codicil included debts that you claim were forgiven by your parent.

You instituted proceedings with the Supreme Court in 20XX arguing that the codicil should not be enforced by the estate.

You discontinued the proceedings following a settlement being agreed by the parties in relation to the two estates.

Probate was delayed due to a number of factors including the following:

-          Person A failed to provide adequate paperwork and instructions to their lawyer in order to progress the application for probate earlier.

-          There were four different solicitors dealing with the estate which led to delays and complications in finalising probate in your parent's estate.

-          There were further delays due to the lengthy process of the lawyer making enquiries in relation to the will of your parent connected with the codicil and in particular the issue of the validity of the codicil.

-          There were delays in receiving the original will of your parent from the Australian Executor Trustees who were holding it and only released it in 20XX.

-          The caveat lodged by Person C over Person B's property and the associated litigation and delays.

Probate was granted in 20XX.

You engaged a real estate agent to sell the property.

Person A and Person C had begun renovations on the property that were incomplete or not carried out to an acceptable standard.

You were advised to repair the yard and pool which were damaged and neglected.

You hired a tradesman to complete repairs and maintenance.

The property was listed for sale a few months after probate was granted.

An auction was held a few weeks later and the property was sold.

Settlement occurred three weeks after the auction.

Apart from a short period where Person A resided in the property rent-free, the property remained vacant from your parent's death until its sale.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195