Edited version of private advice

Authorisation Number: 1052218195607

Date of advice: 5 March 2024

Ruling

Subject: Deceased estate - Commissioners' discretion

Question

Will the Commissioner exercise the discretion under section 118-195 of the 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 the 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 private ruling applies for the following period:

Year ending X June 20XX

The scheme commenced on:

X July 20XX

Relevant facts and circumstances

This private ruling is based on the facts and circumstances set out below. If your facts and circumstances are different from those set out below, this private ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

The deceased owned a Property which was their main residence until their death.

The Property is situated on less than 2 hectares.

The deceased acquired the Property in XX.

The Property was not used for the purpose of producing assessable income by the deceased.

The deceased died intestate on X XXX 20XX.

At the time of their death, the deceased's closest relative (by blood) was their half-sibling who was living overseas.

The deceased had two further distant relatives who resided in Australia.

The half-sibling, nor the two distant relatives, were beneficiaries of the estate.

The deceased's half-sibling who was living overseas was declared the sole beneficiary of the Estate.

Owing to the fact that the half-sibling of the deceased was elderly and living in another country, they engaged in discussions with the two relatives living in Australia.

The half-sibling and the two relatives engaged lawyers to commence negotiations into the administration of the estate.

During the negotiation process, there were some delays in obtaining legal advice due to restrictions as a result of the Covid-19 pandemic, overseas and in Australia.

On X October 20XX, the negotiations came to a close by way of a deed of family arrangement.

The Deed of Family Arrangement was signed by all parties on XX XXX 20XX.

It was agreed that the lawyer ('the administrator') acting on behalf of the half-sibling would apply for the Letters of Administration.

Subsequently, the Letters of Administration were granted to the administrator on X XXX 20XX.

Due to the ongoing negotiations between parties, commencement of the cleaning of the Property could not commence until after the Letters of Administration were granted.

The Property contained a significant amount of personal items of the deceased that had to be removed from the Property.

The administrator engaged real estate agents in XXX 20XX.

On the advice of the real estate agents, repairs were conducted to bring the Property to a saleable condition.

The Property was listed for sale in XXX 20XX.

An auction was held on X XXX 20XX where the Property was sold.

Settlement of the sale of the Property was on X XXX 20XX.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195