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Edited version of private advice
Authorisation Number: 1052193026634
Date of advice: 20 November 2023
Ruling
Subject: Commissioner's discretion - deceased estate
Question
Will the Commissioner exercise the discretion under section 118-195 of Income Tax Assessment Act 1997 (ITAA 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 ending XX/XX/20XX
The scheme commenced on:
XX/XX/20XX
Relevant facts and circumstances
The Deceased and her late spouse purchased the Property on XX/XX/20XX as joint tenants.
The spouse passed away in 20XX and their ownership interest in the Property transferred to the Deceased as the surviving tenant.
The Deceased continued to live in the Property until they moved to a nursing home several months before their passing on XX/XX/20XX.
The Property was less than 2 hectares in size and was never used to generate income.
Within a short time of the Deceased passed away, the Deceased's stepchildren engaged a law firm and from thereon in, claimed that they were the executors of the estate pursuant to a will executed by the Deceased in 20XX. The stepchildren commenced the process of attempting to obtain probate of the estate.
In XX/20XX, the Deceased's children sought legal advice in relation to the estate.
Between XX/20XX and XX/20XX, one of the Deceased's children was gravely ill which left them totally debilitated and unable to participate in the administration of the estate. During this period, the Deceased's children grew suspicious of the stepchildren's inability to confirm the 20XX will and unwillingness to provide the Deceased's medical records or a copy of the will.
In XX/20XX, the children engaged lawyers.
Between XX/20XX and XX/20XX, the children and stepchildren were engaged in legal negotiations during which time the children learned that the 20XX will had not been signed, the Deceased had left another will signed in 20XX, and there was an argument that both wills were invalid on the basis.
On XX/XX/20XX, the children and stepchildren entered a Deed of Arrangement which provided the children with the right to apply for a grant of letters of administration on intestacy from the Supreme Court.
On XX/XX/20XX, the Supreme Court granted the letters of administration on intestacy and the children commenced the process of cleaning, repairing and preparing the Property for sale.
In XX/20XX, the children listed the Property for sale.
On XX/XX/20XX, the children entered a contract for sale of the Property with settlement scheduled for XX/XX/20XX.
The settlement date was extended by the purchaser and occurred on XX/XX/20XX.
Relevant legislative provisions
Income Tax Assessment Act 1997 subsection 118-195