Edited version of private advice

Authorisation Number: 1052162234344

Date of advice: 30 August 2023

Ruling

Subject: Deceased estate Commissioner's discretion

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 acquired from your parents' deceased estates 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 30 June 20xx

The scheme commenced on:

1 July 20xx

Relevant facts and circumstances

Parent A and Parent B bought a property (the property) prior to 20 September 1985.

The land size of the property is less than two hectares.

Two thirds of the interest in the property was held by Parent A and Parent B as joint tenants, while the remaining third of the interest in the property was held by Parent A and Parent B as tenants in common.

The property was the primary residence of Parent A and Parent B until Parent A died over ten years ago.

Upon Parent A's death the interest held as a joint tenant passed to Parent B, however the one sixth interest held as a tenant in common was not transferred upon their death.

Parent B continued to live in the property as their primary residence until they died some years later.

The property was not rented out or used to produce income after Parent B's death.

You and your siblings are beneficiaries of Parent B's estate in equal shares.

You and your siblings were unsure as to whether your parents had left a will, so after Individual B's death your solicitor contacted nearby law firms to search for any will made for Parent A or Parent B.

Upon concluding that no will could be found, you and your siblings applied for Letters of Administration for Parent B's Estate, approximately seven months after the date of Parent B's death.

One of your siblings who died over 50 years ago in a foreign country remained listed as a beneficiary of Parent B's estate. Therefore, you were unable to obtain the Letters of Administration without a death certificate provided by the relevant authorities.

Due to the difficulty in obtaining a foreign death certificate for your sibling you provided a statutory declaration to the court in lieu of a death certificate.

After the Letters of Administration were granted for Parent B's estate were granted you realised that Parent A's one sixth interest in the property remained in their name and no previous application had been made for Letters of Administration for Parent A's estate.

After the Letters of Administration were granted for Parent A's estate you were able to transfer the ownership of the property to you and your siblings (the beneficiaries) with two separate applications.

The ownership of the property was transferred directly to the beneficiaries approximately sixteen months after the date of Parent B's death.

You have stated that restrictions in travel imposed by government in response to the COVID-19 pandemic created delays in attending the property to clean it.

You have also stated that the distance between each of the beneficiaries created difficulties in attending to the property.

Significant COVID-19 restrictions existed for several months in the area the property and the beneficiaries were located during the period from when the beneficiaries obtained ownership of the property to when it was sold.

The contract of sale was executed approximately two years and seven months after the date of Parent B's death.

Settlement of the property occurred two months after the execution of the contract.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195