Edited version of private advice

Authorisation Number: 1052230100744

Date of advice: 8 April 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 period:

Year ended XX XXXX 20YY

The scheme commenced on:

XX XXXX 20YY

Relevant facts and circumstances

The Deceased died on XX XXXX 20YY.

The Deceased was survived by: Person A; Person B; and Person C.

The estate of the deceased contained a property (the Property) which was purchased after 20 September 1985.

The Property was the deceased's main residence at the time of their death and was not used to produce assessable income at this time.

The Property is less than 2 hectares in size.

On XX XXXX 20YY, the Deceased executed their final Will

The Will appointed an Executor.

The Will bequeathed the entire estate to Person A.

On XX XXXX 20YY, the Executor was notified of the Deceased's passing by Person A.

The Executor requested the client profile for the deceased estate from Person A.

On XX XXXX 20YY, Person A returned the completed client profile.

On XX XXXX 20YY, the Executor formally accepted the estate for administration.

On XX XXXX 20YY, the Executor was granted an Order to Administer from the Supreme Court.

On XX XXXX 20YY, the Executor issued a work order for the Property to be valued for estate administration purposes.

On XX XXXX 20YY, the valuation and Authority for Disposal of Realty forms were sent to Person A.

Person A verbally advised it was their intention to have the Property transferred to them as the sole beneficiary of the estate.

On XX XXXX 20YY, the Executor received correspondence from overseas Solicitors that a family provisions claim was likely to be made against the estate.

Person B made an application in the District Court pursuant to the relevant legislative instrument for an Order that adequate provision be made for their proper maintenance and support.

Person C filed a Notice of Address for Service as a separately represented party and is also applying pursuant to the provisions of Part 4 of the Act for an Order that adequate provision be made for their proper maintenance and support.

Delays were experienced in corresponding with the beneficiary and overseas Solicitors

On XX XXXX 20YY, the trust officer was advised that there was a complex family trust in Country A belonging to the Deceased that did not form part of their estate and the trust deed stated how the trust was to be dealt with.

On XX XXXX 20YY, the Family Provisions matter was referred to the Official Solicitor to the Executor for advice.

On XX XXXX 20YY, formal legal advice was received from the Official Solicitor to the Executor that family provisions claim has been filed and the estate could not be distributed until the application has been resolved.

The family provision claims prevented the administration of the Deceased's estate from progressing until the beneficiaries were clearly defined. Once the beneficiaries are defined, the executors can obtain the directions of the beneficiaries (or in this case as per the court order) to administer the assets of the estate. As such, the executors were unable to dispose of the property after the lodgement of the family provision claims.

In XXXX 20YY, Person A started to reside in the Property without permission.

On XX XXXX 20YY, valuers were sent to the Property and at this point they became aware that Person A had moved in.

From XXXX 20YY to XXXX 20YY, the Property was rented out to Person A.

On XX XXXX 20YY, advice was received that the Property was to be sold as the family provisions claim was still ongoing.

On XX XXXX 20YY, Person A delivered vacant possession of the Property.

The Public Trustee attended to the clearing out and cleaning of the Property in preparation for sale.

On XX XXXX 20YY, a work order issued for smoke alarm compliance to be attended to enable sale to proceed.

On XX XXXX 20YY, sale instructions were sent to the relevant entity.

On XX XXXX 20YY, the Property was sold at a Public Auction.

On XX XXXX 20YY, settlement of sale occurred

On XX XXXX 20YY, the Deed of Settlement to family provisions claim was signed by Person B.

On XX XXXX 20YY, the Deed of Settlement to family provisions claim was signed by Person A.

On XX XXXX 20YY, the Deed of Settlement to family provisions claim was signed by Person C.

On XX XXXX 20YY, the Deed of Settlement to family provisions claim was signed by the delegate of the Executor.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195