Edited version of private advice

Authorisation Number: 1052073992135

Date of advice: 23 December 2022

Ruling

Subject: Commissioner's discretion - deceased estate

Question

Will the Commissioner exercise his discretion under subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the two-year capital gains tax (CGT) exemption to dispose of the property?

Answer

Yes.

Having considered your circumstances and the relevant factors the Commissioner will allow an extension of time until settlement. 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 ending 30 June 20xx

The scheme commences on:

1 July 20xx

Relevant facts and circumstances

Your relative (the deceased) died more than two years ago.

The deceased's estate included a dwelling at a property (the property).

You are the sole Executor of the estate in the deceased's will.

The dwelling was the main residence of the deceased at the time of their death.

The size of the property was less than two hectares.

You live in the Country A and were living there at the time of the deceased's death.

You are neither an Australian citizen nor a permanent resident of Australia.

You and your sibling were named as the beneficiaries in the deceased's will.

You were prevented from returning to Australia immediately after the deceased died due to COVID restrictions.

You contacted a probate law firm to act as an agent to apply for probate on your behalf less than one month after the death of the deceased.

Obtaining the grant of probate required physical documents to be delivered to you in the Country A to be signed and witnessed before returning the documents to the probate lawyer's office in Australia to proceed with the probate application process.

You completed and returned the required documentation roughly three months after the death of the deceased.

The probate lawyer's office confirmed receipt of the documents less than one week after you sent them from Country A.

Probate was granted one month after the probate lawyer's office received the documents.

One month after probate was granted you attempted to contact the probate lawyer to ask for an update regarding progressing the execution of the will.

You received notification that the probate lawyer's office had received the physical grant of probate one month after they had received it.

You requested that the probate lawyer initiate the process to transfer the certificate of title for the property into your name approximately one month after this time.

Approximately two weeks later you contacted the lawyer requesting a virtual meeting as they had not updated you as promised.

Tardiness in attending to administrative procedures and lack of communication by the probate lawyer despite your best efforts to expedite the process as much as possible created several months of further delay in obtaining the certificate of title.

The date of transfer on the property title was almost a year after you requested the probate lawyer initiate the title transfer process.

Three months later you were finally informed by the probate lawyer that the certificate of title had been transferred into your name.

In total there was approximately twelve months duration between the date that you requested that the probate lawyer initiate the process to transfer the certificate of title into your name and you being informed that the title had been transferred into your name.

You entered Australia when travel restrictions were lifted and prepared the dwelling for sale.

The dwelling was put on the market in shortly after the end of the two-year period with an auction soon after.

The dwelling was sold at auction and a contract for sale was executed on the auction day.

Settlement of the property occurred shortly after.

Relevant legislative provisions

Income Tax Assessment Act section 118-195