Edited version of private advice

Authorisation Number: 1052057351983

Date of advice: 11 November 2022

Ruling

Subject: Deceased estate two year discretion

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 make 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 ending 30 June 20YY

The scheme commences on:

1 July 20YY

Relevant facts and circumstances

The deceased owned a property that was acquired after 1985.

The deceased passed away in MM YYYY.

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 was situated on less than 2 hectares of land.

The deceased's family member was living with the deceased before they passed away and was providing care for them at the time of their death.

The deceased's family member remained living in the deceased's home for a short period after their death up until they purchased a house in early 20YY. The house remained vacant after this time until it was sold.

The deceased left a Will dividing their estate in equal shares between their X children and appointed them as co-executors of their estate.

The second executor held a financial Power of Attorney for the deceased and had primary access to their financial history and assets.

In MM YYYY, the executor was told by their legal firm that they would not act on their behalf due to a perceived conflict of interest with the other prospective co-executor.

In MM YYYY, the executor appointed a second legal firm to act on their behalf.

In MM YYYY, the executor caused an advertisement to be published in court that they intended to apply for probate, with leave reserved to the second executor.

In MM YYYY, the solicitor managing the executors file departed the firm, and a new solicitor was appointed.

The second executor advised that they wished to be joint applicant for Grant of Probate, and the executor proceeded on this basis.

In MM YYYY, the executor was advised that their lawyers were still awaiting a declaration from the second executor in respect of applying for Probate.

In MM YYYY, the lawyers advised the executor that despite multiple requests for information over several months, they had not received details of assets and liabilities from the second executor.

In MM YYYY, the second executor again indicated that they wished to make a joint Probate application and provided the executor with Certificate of Title for the property. They also changed legal advisors at this time.

In MM YYYY, an additional advertisement was published in Supreme Court of State A which indicated the intention for the executors to apply for Probate jointly.

In MM YYYY, the Inventory of Assets and Liabilities was returned to the executor's lawyers by the second executor, however this information was incomplete and unsigned.

In MM YYYY, a solicitor from the second firm took over the matter on the executor's behalf.

The solicitor left multiple voicemail messages during 20YY on the second executor's voicemail that were not returned.

In MM YYYY, the second legal firm advised the executor that all avenues had been exhausted in the matter and that they should seek further individual advice.

In MM YYYY, the executor spoke to a contact at a large law firm and received a recommendation to contact a lawyer, who was their current solicitor in the matter.

In MM YYYY, the executor was advised that it would take several weeks to prepare a Summons and Application and that with Covid-19 delays, the Supreme Court of State A may not be able to schedule the matter for several months from the date of filing the request.

In MM YYYY, further attempts to contact the second executor were made with a request to sign an authority during MM YYYY to enable the executor to apply for probate as sole executor in light of inability to apply jointly to date.

In MM YYYY, lodgement was made to the Supreme Court of State A requesting that the plaintiff be permitted to uplift the original Will of the deceased with the executor as plaintiff and the second executor as first defendant and the executor's original law firm as second defendant.

In MM YYYY, notice was served personally on the second executor as first defendant.

In MM YYYY, the second defendants' lawyers, who held the Will, stated that they would comply with any Order made by the Court.

The second executor did not file a Notice of Appearance or otherwise engage with proceedings.

In MM YYYY, the Court Ordered that the Will be provided to them within 7 days.

In MM YYYY, a Request to Uplift the Will was made.

In MM YYYY, Orders were made by the Supreme Court of State A to enable the executor to uplift the Will of the deceased.

Probate was granted in MM YYYY, with leave reserved to the second executor.

In MM YYYY, the executor commenced cleaning up the property.

In MM YYYY, the executor engaged with a real estate agent to sell the property.

The property was listed for sale in MM YYYY.

A contract to sell the property was entered into in MM YYYY with settlement occurring in MM YYYY.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195