Edited version of private advice

Authorisation Number: 1052088778178

Date of advice: 17 February 2023

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. For further information about the Commissioner's discretion go to ato.gov.au and search for 'QC 66054'.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

The deceased passed away sometime after 1985.

The deceased's will provided their 3 children (the beneficiaries) an equal interest in their estate. The beneficiaries do not get along with each other.

The deceased's will appointed you as executor and you were granted probate a short time after their death.

The deceased acquired the property as joint owner with their spouse before 1985. Upon their spouse's death, they became the sole proprietor under survivorship after 1985.

The property was the main residence of the deceased until they moved into a nursing home.

The deceased did not have an ownership in any other property and continued to treat the property as their main residence until their death.

The property was not used to produce assessable income just before the deceased passed away.

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

Shortly after their death, you sought instruction from the beneficiaries as to their intention for the property (to sell or transfer).

Later, the beneficiaries wrote to you instructing you to sell the property.

The property was occupied by the deceased's child, and beneficiary (Child A) in accordance with arrangements made prior to the deceased's death (not expressed in their will). The property was not income generating and Child A did not pay rent or contribute to rates, repairs, or maintenance.

After the deceased's death, you made various attempts to communicate with Child A to reach a mutual agreement for them to vacate. Child A explained they did not have enough funds to move out and had difficulty acquiring alternative accommodation due to COVID-19 restrictions and the rental crisis. You offered to pay Child A's rental bond and 2 months' rent in advance.

Later, you wrote to Child A and followed up progress several times. Child A did not respond, and you received no acknowledgement for these communications. You also sent letters to the other beneficiaries explaining the delays and issues you were experiencing.

Later, you made arrangements to evict Child A. You made various attempts to contact Child A and issued notices to vacate. Child A did not respond and did not vacate.

Later, you applied to the court for a possession order. The court order was granted. However, due to COVID-19 restrictions, and a backlog, the eviction did not take place until sometime later. You immediately took possession of the property and prepared the property for listing for sale.

A public auction was held, allowing time for clearing, cleaning, marketing, and preparing contracts.

The property sold at auction and settled less than 6 months after the two-year period ended.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 118-195

Income Tax Assessment Act 1997 Section 118-145