Edited version of private advice

Authorisation Number: 1052163114896

Date of advice: 1 September 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 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 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

On XX XX 19XX the deceased and their spouse acquired a property (the Property) as joint tenants.

The property consisted of a dwelling and attached land that was less than 2 hectares.

The deceased and their spouse lived in the dwelling as their main residence.

The spouse of the deceased passed away in 20XX and their interest in the Property passed to the deceased.

In 20XX, the deceased moved into a care facility. The adult child of the deceased, continued to occupy the dwelling allowing for a caretaker on the property. The child assumed management of the deceased's affairs.

In 20XX, the child's management of the deceased's affairs were revoked.

The State Trustee was appointed as manager of the deceased's affairs.

Commencing from XX XX 20XX, a formal agreement was drawn with the property manager requiring the child to pay a nominal rent amount of $XX per week.

On XX XX 20XX the Deceased passed away and left a will (the Will).

The beneficiaries named in the Will included the Executrix, the Deceased's adult child (Beneficiary A), the Deceased's adult child (Beneficiary B) and another relative.

The Executrix was suffering from advanced Alzheimer's disease and was not able to perform the duties required to Administer the Estate.

Following the Deceased's death, Beneficiary B engaged a legal representative and attempted to secure all family documentation in relation to the Estate.

Beneficiary B had possession of family documentation, including the original Will.

Beneficiary B did not provide the required documents when asked.

Beneficiary A made several failed attempts to engage with both Beneficiary B and their solicitor to obtain the documents required to administer the Estate.

On XX XX 20XX, Beneficiary A filed a court advert to detail that no progress had been made to secure the original Will or the evidence to demonstrate incapacity of the Executrix named in the original Will.

On XX XX 20XX, a Summons for Administration was filed in the Supreme Court by Beneficiary A, detailing that the Executrix named in the original Will was under incapacity and unable to apply.

The Court requested that the applicants provide the original Will and formal consent by all beneficiaries to allow Beneficiary A to administer the estate. The Letters of Administration were limited until the original Will was produced.

In XX 20XX, after further failed attempts to obtain the original Will from Beneficiary B and their Solicitor, a Notice of Motion was filed in the Supreme Court in. This Notice of Motion sought the provision of the Will and signed consent orders from beneficiaries of the Estate.

On XX XX 20XX, following the serving of Motion pleadings, consent orders were signed by all parties with an agreement to provide the required documents, including the original Will.

On XX XX 20XX sealed Consent Orders were issued, granting Administration of the Estate to Beneficiary A (the Administrator).

The Administrator gave instructions to the property managers to issue a 'Notice to Vacate' to Beneficiary B.

On XX XX 20XX, the property manager issued a 'Notice to Vacate' to Beneficiary B.

On XX XX 20XX Beneficiary B vacated the Property and in XX 20XX the Property was listed for sale.

On XX XX 20XX the Property was auctioned, and a contract of sale was completed.

On XX XX 20XX settlement occurred, approximately 9 months after the expiry of the 2-year period.

The Administrator has made the absence choice for the period when the Deceased moved out of the dwelling and into the care facility.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195

Income Tax Assessment Act 1997 section 118-145