Edited version of private advice

Authorisation Number: 1052222414680

Date of advice: 16 February 2024

Ruling

Subject: Commissioner discretion - Deceased estate

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 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:

1 July 20XX

Relevant facts and circumstances

The deceased passed away on XX/XX/20XX.

The deceased owned a property (the property) that was acquired before 20 September 19YY.

The property was the main residence of the deceased prior to them moving to an aged care facility just before they passed away. The property was not used to produce assessable income at that time.

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

On XX/XX/20XX, the estate was reported and accepted for administration by the relevant Public Trustee.

In 20XX, the deceased was diagnosed with dementia. The deceased's death certificate listed 'Advance Dementia' for an unlisted period of time. As the deceased's will was dated within a certain timeframe of the deceased's passing, their capacity to create and sign a will needed to be confirmed.

From XX/XX/20XX to XX/XX/20XX, the matter was referred to the Public Trustee legal department to determine the deceased's testamentary capacity and to assist with obtaining the Order to Administer from the Supreme Court.

Between XX/XX/20XX - XX/XX/20XX, letters were sent to the potential treating doctor at various medical centres to confirm or deny the deceased's capacity to execute their will on or around the date that the will was signed. There was no response to these letters.

On XX/XX/20XX, a letter was sent to Medicare to request the deceased's medical history and to obtain the treating doctor information around the time the will was signed.

On XX/XX/20XX, follow up letters were sent.

On XX/XX/20XX, an email response was received from the treating doctor, advising that they did not have access to the medical records as they had left in 20XX, the practice had since closed, the building had been sold and they had not had contact with the practice manager. They did confirm that they did not believe that the deceased had the capacity to make or sign a will.

On XX/XX/20XX, a follow up letter was sent to Medicare and several letters were sent to different medical centres to try and obtain the required information. No response was received. Instructions were also sent to the Public Trustee legal department to assist with obtaining the order to administer from the Supreme Court.

Between XX/XX/20XX and XX/XX/20XX, follow up letters were sent to the medical centres and to Medicare.

On XX/XX/20XX, Medicare records were received.

On XX/XX/20XX, the Public Trustee legal department advised that the Medicare reports had been reviewed. They advised to attempt to locate the practice manager for the medical centre that the deceased was attending prior to the building being sold.

On XX/XX/20XX, the practice manager was located and contacted. They advised that all medical records had been sent to different practices.

On XX/XX/20XX, the practice manager advised that the deceased's records may have been sent to a particular medical centre, however this establishment was contacted, and no records were held there.

On XX/XX/20XX, the Public Trustee legal department advised to contact the deceased's children to obtain information. No phone calls were made from them.

On XX/XX/20XX, the Public Trustee legal department contacted one of the witnesses in the will and sent statutory declarations to the witness and the deceased's doctor.

On XX/XX/20XX, a letter was received from the deceased's child, which advised of concerns regarding the deceased's capacity at the time that they signed the will. Photocopies of the deceased's diary were provided.

On XX/XX/20XX, the Public Trustee legal department provided draft letters to the deceased's children to inform them that the Public Trustee intends to apply for an order to administer and provided them with a timeframe to respond. No responses were received from the beneficiaries.

On XX/XX/20XX, the signed affidavits from witnesses to the will were received and were sent to the legal department to draft the application.

On XX/XX/20XX, the Order to Administer was filed with the Supreme Court.

The Order to Administer was granted on XX/XX/20XX and was received by the Public Trustee on XX/XX/20XX.

On XX/XX/20XX, one of the beneficiaries of the estate, who had resided in the property with the deceased passed away.

The beneficiary's will, which was handwritten and dated XX/XX/20XX, was provided to the Public Trustee. The will also raised testamentary capacity concerns and a legal matter was opened to investigate this.

Between XX/XX/20XX and XX/XX/20XX, investigations occurred into the beneficiary's testamentary capacity and negotiations with the executors of the beneficiary were undertaken.

On XX/XX/20XX, the Public Trustee engaged with a contractor to clean and clear the property.

On XX/XX/20XX, the cleaning and clearing of the property was complete.

On XX/XX/20XX, the property was listed for sale.

A contract was entered to sell the property on XX/XX/20XX with settlement occurring on XX/XX/20XX, approximately X years after the date of death.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195