Edited version of private advice

Authorisation Number: 1052122837732

Date of advice: 31 May 2023

Ruling

Subject: Commissioner's discretion to allow an extension to the two-year time limit

Question

Will the Commissioner exercise the discretion under section 118-195 of the Income Tax Assessment Act 1997 to allow an extension of time for the Administrator to dispose of the ownership interest in the dwelling owned as trustee of the deceased estate and disregard the capital gain or capital loss 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 period:

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

The deceased had a dwelling (the Property) which was their main residence prior to their death.

The deceased died intestate. A grant of letters of administration on intestacy was issued to a child of the Deceased. That child (the Administrator) resides overseas.

The Administrator obtained appraisals for the Property.

One of the children indicated they may purchase both the Property and another property (also part of the Estate) located overseas. The children could not reach an agreement for the sale of the Estate Property with another child requesting that the Estate Property be put on the market the market.

The Administrator obtained updated appraisals. The appraisals were obtained to assist with the negotiations for the sale of the Estate Property.

The relationship between the children deteriorated and one of them engaged legal representation, following which correspondence issued between the children for some time, in an attempt to obtain a list of the assets of the Estate and what steps had been taken by the Administrator.

The legal dispute between the children over ownership of the Property (including a foreign property) lasted approximately two years, when an independent administrator was appointed.

Lawyers acting on behalf of a child first raised that an independent administrator would be required to progress the administration of the estate.

An originating application was then filed in the Court by one of the children of the Deceased, sought the removal of the Administrator and the appointment of an independent administrator.

Orders revoking the grant of the former administrator and appointing an unrelated person as independent administrator were then made two years later.

The grant of administration on intestacy was then issued.

The new Administrator made significant steps to progress the administration of the Estate following their appointment. The registered mortgage over the Estate Property was discharged. The Administrator then engaged a real estate agent to undertake an appraisal of the Estate Property and to advertise the Estate Property for sale.

The Administrator entered into a conditional contract of sale for the Property. Settlement occurred two months later.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195