Edited version of private advice

Authorisation Number: 1052058905367

Date of advice: 22 November 2022

Ruling

Subject: Commissioner's discretion - deceased estate

Question

Will the Commissioner exercise the discretion under section 118-195 of ITAA 1997 to allow an extension of time for you to dispose of your ownership interest in the dwelling acquired from a deceased estate 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 periods:

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

The will of the deceased was finalized X X 20XX.

The property which the deceased owned, was their main residence at the time of their passing on X X 20XX.

Probate was granted in the State Supreme Court on XX X 20XX.

The estate was to be split evenly between the four beneficiaries, the deceased's spouse (executor) and X children from a previous marriage.

On XX X 20XX the real estate emailed the executor regarding their instructions to sell the property.

On XX X 20XX the real estate advised the estate solicitor that the children wish to retain the property. Furthermore, while the executor was taking steps to sell the property, they also learned X out of the X children had already moved into the property.

X of the children also expressed an interest to receive the property in-specie as part of their beneficiary distribution. However, this required all X children to agree to the arrangement and the value of the property meant this did not eventuate.

In response to a previous further information request the estate's solicitor provided a X-page document detailing all the circumstances/events delaying the settlement of the estate. The estate has been plagued by several issues between attempting to sell the property in 20XX and the eventual settlement in 20XX including the following:

•         the children did not want the executor to be in the role and wished another relative to be in this role. While the executor was agreeable to this situation, which relative was preferred was never confirmed.

•         disagreement existed between the beneficiaries regarding the ultimate treatment of the property

in-specie.

•         disagreement between the beneficiaries existed regarding the appropriate valuation of the property for settlement.

•         disagreements on the vacating the property.

•         extensive damage to the property while the beneficiaries resided in the property impacting the estimated valuation and settlement.

•         issues on obtaining a response from all parties' solicitors - changing solicitors.

o   Communication with the children, beneficiaries' legal representatives was often delayed due to lack of their proper instructions and a change of solicitors for the children beneficiaries during this time.

•         emails/correspondence to beneficiaries/representatives were often ignored or not answered.

•         The children's share of the estate was meant to be held on trust for them until they attain the age of XX.

The executor did not want to sell the property if it meant the deceased's children being put out on the street especially in light of the oldest child having health issues.

The property was listed for sale on XX X 20XX. This was as soon as practical after the executor came to the conclusion that the in-specie transfer of the property to the beneficiaries could not be resolved.

The property was sold on the XX X 20XX for $XXX within 12 months of the being listed for sale.

A request to vacate the premises was then sent to the occupants on X June 20XX.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195