Edited version of private advice

Authorisation Number: 1052211778595

Date of advice: 16 January 2024

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 30 June 20XX

The scheme commenced on:

July 20XX

Relevant facts and circumstances

The deceased acquired a property after 20 September 1985.

The property was situated on less than two hectares of land.

The property was the main residence of the deceased until the date of deceased's death and was not used to produce assessable income at that time.

The property was not used from the day of deceased's death to the date the property was sold.

Over 12 months after the death of the deceased, the law firm M was first notified of the death of the Deceased by a neighbour of the deceased.

The law firm M held what they thought to be the last will of the deceased dated XX 20XX.

In the Will, X, the adult child of the deceased was appointed sole executor and beneficiary with a member of the law firm M appointed alternate executor.

The whereabouts of X were unknown at this time and they had not contacted the law firm M about the death of the deceased. The law firm M commenced efforts to locate X which were unsuccessful.

Around two years after the death of the deceased, when attending the Deceased's property, a copy (not the original) of a post-dated will dated XY 20XX was found which appointed Y and Z (friends of the deceased) as executors with X still the beneficiary.

From the date of the deceased's death until 20XX, Y and Z did not take any action regarding the estate because they were not aware of their obligations, as it was their understanding that the solicitor would make contact with them when their role as executors was to commence.

In 20XX, the law firm M contacted the executors to seek assistance in contacting X and also obtained instructions to locate the original of the Will.

The law firm M contacted approximately XX other law firms to see if they held the original of the Will.

A neighbour of the Deceased contacted X and gave them the law firm M's contact details.

The law firm M continued attempting to locate the original of the Will dated XY 20XX and also continued its efforts to locate X.

Around four years after the death of the deceased, the law firm M confirmed that the original Will was drawn by a community legal centre where only a copy of the executed Will remained. The original Will was never located.

On XX 20XX, discussions were held with Z regarding attempts to locate the beneficiary.

From 20XX to 20XX, the law firm M attempted many times to contact the executor regarding attempts to locate the beneficiary and to seek instructions to continue.

During this period, Y and Z experienced health concerns and sold their property to move closer to care and to more suitable accommodation. They did not advise the law firm of their new address.

Sometime later the law firm was advised of the executor's new address.

Some five years after the death of the deceased, the law firm contacted Z who only then formally excepted the role of executor.

The executor provided the law firm M with instructions to proceed.

The law firm subsequently made first contact with the beneficiary.

On XX 20XX, the application for grant of probate was filed.

On XX 20XX, a real estate agent was engaged to sell the Property.

On XX 20XX, the Contract of Sale for the property was signed.

On XX 20XX, the Grant of Probate was obtained.

On XX 20XX, settlement for the sale of the property occurred, a period of over six years since the death of the deceased.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195