Edited version of private advice

Authorisation Number: 1052025619027

Date of advice: 8 September 2022

Ruling

Subject: Commissioner's discretion - deceased estate

Question

Will the Commissioner allow an extension of time for you to dispose of your ownership interest in the dwelling and disregard the capital gain 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 'QC 66057' on 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 deceased and their spouse owed a property that was acquired prior to 1985.

The deceased passed away in September 20XX.

The deceased acquired their spouse's share of the property when they passed away in 19XX.

The property was the main residence of the deceased just before they passed away and was not used to produce assessable income at the time of death.

The property is situated on less than two hectares of land.

The property was vacant from the date the deceased passed away until it was sold.

Probate was granted in February 20XX.

Following the grant of probate, the executors disputed terms of the deceased's Will.

The Will specified that the property was to be shared equally between the executors and could be purchased by either one of them for a market value price as at the date of death determined by a registered valuer.

The Will also contained an adjustment clause which considered earlier financial assistance provided by the spouse of the deceased to one of the executors to assist them with purchasing a property.

The executors disagreed upon were whether an adjustment clause was still relevant and the date in determining the market value of the property.

Due the executors disputing these terms, they did not immediately seek a registered valuer to determine the market value of both properties.

Both executors sought the assistance of separate legal representatives. The lawyers provided general assistance with administering the estate, locating the certificate of title for the property, interpreting clauses in the Will, communicating outcomes, and performing negotiations between the executors.

The executors both incurred significant costs from the legal representatives.

In October 20XX, one of the one of the executors was required to move interstate to care for a sick relative and due to Covid-19 lockdowns they could not move between states easily.

By December 20XX, the executor's relationship had further deteriorated, and communication was limited to letters between their lawyers.

In January 20XX, one of the executors was involved in a motor vehicle accident at work which resulted in delays and complications in attending to the administration of the estate.

In February 20XX, the executors each sort valuations of the property which varied in price.

One of the executors made an offer to purchase the property based on the lower valuation price, however the other executor did not accept this offer.

In May 20XX, a valuation was obtained for the property relating to the adjustment clause, however the executors continued to disagree.

In May 20XX, one of the executors made another offer to purchase the Property based on the May 20XX valuation.

As an agreement could still not be reached between the executors, they decided to list the property for sale.

The property was co- listed for sale with two separate real estate agents in October 20XX. A contract was entered into to sell the property in November 20XX with settlement taking place in January 20XX.

Relevant legislative provisions

Income Tax Assessment Act 1997 subsection 118-195(1)