Edited version of private advice

Authorisation Number: 1052059801671

Date of advice: 22 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 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 ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

The deceased owned a property that was acquired prior to 1985.

The deceased passed away in October 20XX.

The property was the main residence of the deceased throughout their ownership period and was not used to produce income at that time.

The property was situated on less than two hectares.

The deceased's relative was appointed as executor of the estate.

The executor then commenced the Probate process.

The advice from the original lawyer handling the deceased's Probate at the time was to not sell the property until the entire Probate process had completed.

The property was leased to tenants in December 20XX.

The executor went into hospital for routine surgery and subsequently passed away in February 20XX.

Following the deceased executor's death, the existing Probate was cancelled.

The current executor, the adult child of the deceased executor needed to make an application to the Probate Court to commence registering a new Probate application with them as the new executor.

The death of the deceased executor was investigated by the coroner and was subject to a medical malpractice claim.

The focus of the family after the executor's death shifted to be on the coroner's investigation and the legal issues surrounding the death, and not on finalising the estate.

The current executor engaged with lawyers to initiate a legal investigation into the coronial investigation.

No action could be taken on the property from the time that the deceased executor passed away until Probate was granted.

There were difficulties faced by the current executor of the estate in having to attend to the estate and Probate of their deceased parent's estate.

Probate was granted in August 20XX.

The Probate Office was not accepting inbound letters at the time due to the risk of the transmission of Covid-19.

By October 20XX, the Probate Office had not provided the current executor with the original letters required to action any ownership change in the property.

In October 20XX, the executor received correspondence from the coroner advising that the medical malpractice case had been referred to the Coroners Prevention Unit for review as there were concerns and that the review would take some time.

In April 20XX, the title transfer for the property occurred.

In late September 20XX, the case with the current executor's lawyers actioning the coroner's case was closed.

Once the current executor had received the final report on the coroner's investigation in early 20XX, and Probate had completed, closure had been provided on the two deaths. They then commenced the process in finding a real estate agent to list the property for sale.

A real estate agent was approached in February 20XX to propose a sales strategy.

An additional real estate agent was approached some weeks later to propose an alternate sales strategy to place the property on the market as quickly as possible and the property was sold at auction.

A contract was entered into to sell the property in May 20XX with settlement occurring in July 20XX.

Relevant legislative provisions

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