Edited version of private advice

Authorisation Number: 1052098465275

Date of advice: 16 March 2023

Ruling

Subject: Deceased estate - 2-year discretion

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, 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 commenced on:

1 July 20XX

Relevant facts and circumstances

Person One and their spouse Person Two (both deceased) owned a property as joint tenants.

The property was acquired by Person Two prior to 1985.

In 20YY, Person Two transferred X% ownership interest in the property to Person One.

Person One passed away in MM 20YY.

Person Two occupied the property until they could no longer reside at the property by themselves and moved into an aged care facility around MM 20YY.

Person Two passed away in MM 20YY.

Person One and Person Two had each granted one another life tenancy in their will.

The property was the main residence of both Person One and Person Two 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 two hectares of land.

Both Person One and Person Two had also both granted X% interest to the executor of both of their estates.

The executor knew Person One and Person Two as their parent had previously had a strong friendship with them.

After experiencing health issues for several years, the executor experienced several serious health issues from MM 20YY. The executor's health issues resulted in considerable periods of time spent in hospital.

The executor's child also suffered from a life-threatening medical condition.

As a result of the executor's health issues and their child's health issues, they had lost contact with Person Two and was not able to visit them.

The executor attempted to phone Person Two several times whilst in hospital.

By MM 20YY, the executor was unable to contact Person Two.

The executor then contacted Person Two's family member who provided them with limited information.

In MM 20YY, the executor attempted to visit Person Two at the property, however, was unaware that they had passed away.

The executor discovered that Person Two had passed away after speaking with an acquaintance of Person One and Person Two who was in the same aged care facility as the executor's parent.

The executor attempted to contact members of Person Two's family to determine what had happened to Person Two, however these attempts were unsuccessful.

The executor was aware that they had been appointed as executor of both Person Two and Person One's estates as both Person Two and Person One had provided them with copies of their wills back in 20YY. They had also shown them where the original wills were kept within the property.

As the executor did not have access to the property, they could not retrieve the original wills and commence the probate process.

In early 20YY, the executor approached a legal firm to instruct them to apply for probate.

The legal firm advised that they did not have any expertise in that area and recommended another firm.

In MM 20YY, the executor approached the recommended firm.

This firm later advised that another legal firm had received a request from another applicant to apply for Letters of Administration for Person Two's estate.

The executor's legal firm was unable to determine who had made the application.

In MM 20YY, the executor received a letter regarding a Part IV claim. The legal firm also received a letter from the other applicant's lawyer informing them that they were still awaiting instructions from their client, which was later determined to be Person Two's siblings.

The executor was disappointed with the legal firm and in MM 20YY, approached a third legal firm.

Despite several attempts, this legal firm was unable to deal with the legal firm that had received the request for Letters of Administration from Person Two's siblings.

Towards the end of 20YY to the end of 20YY, the executor's health issues worsened, requiring them to have life-threatening medical treatment.

The executor's child also experienced health issues during this time.

As a result of these events, the executor decided to place the probate application process on hold to allow time to recover.

When the executor commenced the legal proceedings for probate to be issued, Covid-19 occurred, and lockdowns affected their ability to liaise with the current law firm.

The legal firm that had received the request for Letters of Administration refused to co-operate when the executor requested access to the property.

In MM 20YY, the executor's legal firm contacted the police and permission was granted to change the locks on the front entrance to the property.

Once the executor had access to the property, they discovered that the original wills of Person One and Person Two and the certificate of title for the property were missing. They also noticed that some of the items in the property had been misplaced.

In MM 20YY, the executor discontinued dealing with the third legal firm as they were unable to reach a point where the probate application could be lodged.

The executor then contacted the original legal firm they initially approached who recommended another legal firm who they then approached.

In MM 20YY, the executor received a message from the fourth legal firm to sign an Affidavit.

In MM 20YY, the executor signed a further Affidavit.

Probate was granted in MM 20YY for both estates.

In MM 20YY, the executor began organising the property to be sold. The executor arranged for the property to be cleaned and also engaged with several real estate agents.

The executor appointed a real estate agent to sell the property and the property was listed for sale in MM 20YY.

A contract to sell the property was entered into in MM 20YY with settlement occurring in MM 20YY.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195