Edited version of private advice

Authorisation Number: 1052228375446

Date of advice: 15 March 2024

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 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 periods:

Year ended 30 June 20XX

Year ended 30 June 20XX

The scheme commenced on:

29 September 20XX

Relevant facts and circumstances

The Deceased passed away on DD MM 20XX.

As at date of death, the Deceased owned the Property as their main residence. The Deceased acquired the dwelling on the Property after DD MM 19YY. The land area of the Property is less than 2 hectares in size.

The Property has never been used to produce assessable income.

The Deceased left a Will which provided the following:

•         Person A, to be appointed as Trustee.

•         the Property to be held on trust for the use and occupation of the Life Tenant.

•         Upon the death of the Life Tenant, the Property to pass to The Beneficiaries living at the time of the Life Tenant's death in equal shares.

You are one of the Beneficiaries.

On DD MM 20XX, Person A as trustee became the registered proprietor of the Property. The Life Tenant did not register their interest in the Property. The Beneficiaries did not register their remainder interest in the Property.

On DD MM 20XX, Person A passed away. Person A appointed Person B as their sole executor and trustee of their deceased estate. However, Person B passed away without obtaining probate for Person A's Estate.

Person B left a Will appointing you as Executor of their Deceased Estate.

On DD MM 20XX, the Life tenant died.

Upon the death of the Life Tenant, the Beneficiaries decided to sell the Property. You in the position as informal Administrator sought legal advice to administer the Deceased's estate.

Complexities of the Deceased's estate delayed the estate administration, including the broken chain of executorial representation resulting in the inability to appoint a replacement trustee. Ongoing disputes detailed below between the Beneficiaries significantly delayed applying for a vesting order and the administration of the Estate:

Between June 20XX and September 20XX, you applied to the Registrar of Titles in the relevant State for a grant of letters of administration de bonis non (granted where an executor or administrator dies or goes missing prior to administering an estate and a replacement is required) with the Will of the Deceased annexed. The Registrar of Titles refused the application as Person A's Will was never proven. Subsequent applications were made to the Registrar without resolution.

In early 20XX, you sought specialist legal advice including engaging a barrister due to the complexity of the matter. You were advised to proceed with an application for a vesting order to allow the transfer and sale of the Property. On DD MM 20XX, the proposed course of action was outlined to the Beneficiaries.

X of the X Beneficiaries agreed with the proposed course of action which was to seek a vesting order from the court because it was not possible to appoint a replacement trustee to the Deceased's Estate.

Between MM 20XX and MM 20XX, numerous attempts were made by your legal representatives to have all the beneficiaries engage in the process. An ongoing dispute with at least one of the beneficiaries delayed the process. Ongoing disputes and issues of legal representation for one of the beneficiaries continued into mid-20XX. You as informal administrator of the Estate were unable to progress the administration of the Estate until such time as all the Beneficiaries agreed to be named as plaintiffs in the application for the vesting order.

By MM 20XX, all beneficiaries agreed to procced with the course of action. By MM 20XX, the application had been filed with the Supreme Court in the relevant state.

On DD MM 20XX, the matter was heard and orders were made for the Property to vest in the Beneficiaries.

On DD MM 20XX, Pursuant to a vesting order, the Property vested in you and the other Beneficiaries, as tenants in common.

The Property was sold DD MM 20XX and settlement occurred on DD MM 20XX.

Relevant legislative provision

Income Tax Assessment Act 1997 section 118-195