Edited version of private advice

Authorisation Number: 1052050425124

Date of advice: 4 November 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 set out in the Practical Compliance Guideline PCG 2019/5, the Commissioner will allow an extension of time to dispose of your ownership interest in the property. 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 commenced on:

1 July 20XX

Relevant facts and circumstances

After 1985, the deceased bought the property jointly with their spouse.

After 1985, the deceased's spouse passed away. The deceased acquired their spouse's ownership interest.

Later, the deceased passed away. The deceased's will (the Will) appointed you as executor of the estate. The Will provided that the estate will be divided equally between you and your X siblings.

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

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

The property remained vacant after the deceased passed away.

For several months after the deceased passed away, you attended appointments regularly (almost monthly) for a serious health concern.

You were granted probate of the Will. You had a discussion with your X siblings regarding a Deed of Family Arrangement to alter the distribution of the estate.

Later, the Deed of Family Arrangement (the Deed) was executed. Effectively, the Deed provided among other things that:

•         your sibling B receives the funds held in the estate's bank accounts in lieu of receiving one-third share in the property.

•         you and your sibling A receive the property as tenants in common in equal shares.

Later, as executor of the estate, you commenced transfer of the property title to you and to your sibling A.

Later, the property title transferred to you and to your sibling A as tenants in common in equal shares in accordance with the Deed.

Shortly after, you attended many more medical appointments for your existing health concern and a new injury.

You have provided a report from the hospital showing you attended hospital more than XX times during a three-month period.

You have provided a letter from your real estate agent outlining a timeline of your engagement with them:

• You asked for a market appraisal of the property for the purposes of applying for probate.
• You advised them that you would engage their services after probate.
• During the period you were attending hospital, they provided you an updated market appraisal. They advised due to the impact of COVID-19 lockdowns, and medical issues, you have been unable to travel to the house to meet them or to ready the property for sale.
• Later, they provided you an updated market appraisal. You informed them you wished to execute an agency agreement to sell the property.
• You signed the agency agreement.
• The property was sold at auction.

No repairs or renovations were completed on the property.

The property sale settled less than 5 months after the end of the two-year period limit.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 118-195