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Edited version of private advice
Authorisation Number: 1052124396734
Date of advice: 2 June 2023
Ruling
Subject: Commissioner's discretion - deceased estate
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 you to dispose of your ownership interest in the dwelling 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 ato.gov.au for 'QC 66057'.
This ruling applies for the following period:
Year ended XX/XX/20XX
The scheme commenced on:
XX/XX/20XX
Relevant facts and circumstances
The Deceased passed away on XX/XX/20XX.
As at the date of death, the Deceased owned the Property which was their main residence.
The Deceased acquired the Property with a mortgage in favour of the Mortgagor in XX/20XX. Up until the date of death, the Deceased lived at the Property with Person A.
The Deceased died intestate. In accordance with intestacy laws, the only person who was entitled to administer the estate was Person B.
Despite Person A's requests, Person B refused to engage with the administration of the estate for various reasons.
On XX/XX/20XX, Person A applied for Letters of Administration from the Supreme Court.
In response to Person A's application, the Supreme Court raised requisitions advising that Person B was the only person who could apply for letters of administration. In the absence of this, Person A needed to provide a "Deed of Disclaimer" from Person B in support of their application.
A reminder was again sent to Person A's lawyers on XX/XX/20XX regarding the requisition raised.
In XX/20XX, Person A came under the care of the Trustee for financial administration. At this point, the Trustee became aware of the Deceased's unadministered estate. Person A had been living in the Property without utilities and faced becoming homeless. The Trustee established that Person B had died on XX/XX/20XX.
On XX/XX/20XX, a doctor confirms Person A did not have capacity to provide instructions on or administer the estate.
On XX/XX/20XX, the Supreme Court granted letters of administration for the estate of the Deceased (the Estate) to the Trustee.
On XX/XX/20XX, the Mortgagor took possession of the Property as neither the Estate nor Person A had sufficient funds to clear the mortgage.
On XX/XX/20XX, the Mortgagor sold the Property with settlement occurring on XX/XX/20XX.
At all material times, the Property was not used for producing assessable income.
The Property is less than 2 hectares in size.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-195