Edited version of private advice

Authorisation Number: 1052231362437

Date of advice: 5 April 2024

Ruling

Subject: Commissioner's discretion - deceased estate

Question

Will the Commissioner exercise the discretion 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.aufor 'QC 66057'.

This ruling applies for the following period:

Year ended XX XXXX 20XX

The scheme commenced on:

XX XXXX 20XX

Relevant facts and circumstances

In 19XX, the deceased and their second spouse bought the property as tenants as common in equal shares.

The land on which the property is situated is less than 2 hectares. The property was always the deceased's main residence and not used to produce income.

In 19XX, the deceased, remarried at age XX (the second spouse).

The relationship between the deceased and their second spouse deteriorated over the years such that in the late 19XX's whilst they continued to both live in the property, they were for all intents and purposes living separate lives. You became increasingly concerned about the deceased's health, so you moved them to be closer to you and they resided there intermittently. All their goods and chattels remained in the property. Although they would occasionally stay with you for a few days, and sometimes for longer periods, your general practice was to visit them regularly in the property. You chose on behalf of the deceased to continue to treat the property as their main residence after they moved out of the property. They went into rehabilitation treatment, their condition deteriorated, and they died there.

On XX XXXX 20XX, the deceased died aged XX years.

OnXX XXXX 20XX, probate was granted on the deceased's will, dated XX XXXX 20XX. The will made you and another person the co-executors of the estate.

The will did not make any express provision for the second spouse to have the use and benefit of their interest in the property if the second spouse survived them. You and the co-executor considered it fair and reasonable that the second spouse should have that until they died. However, the will states: "I neither make nor intend to make any provision for my second spouse as we have been estranged and living separately and apart (although under the one roof) for at least the last XX years and they have sufficient resources to adequately maintain themself."

On XX XXXX 20XX,after probate was granted, you wished to be registered on the title to property as legal personal representatives of the deceased's half interest in the property. To this end, you instructed your solicitors to write to the second spouse, which they did, to inquire whether they held the physical certificate of title to the property and, if so, to forward it to your solicitors and if they did not hold the title, then to inform your solicitors as to its whereabouts.

On XX XXXX 20XX, having received no response from the second spouse, your solicitors wrote again.

On XX XXXX 20XX, having received no response from the second spouse, your solicitors wrote again saying that in the absence of a response by XX XXXX 20XX, proceedings would be commenced in relation to the property title.

On XX XXXX 20XX, the second spouse informed you by letter saying they could not locate the title.

On XX XXXX 20XX,your solicitors sent the second spouse documents to assist in making application to the Land Titles Office to replace the lost title.

On XX XXXX 20XX,when no response had been received from the second spouse, your solicitors again wrote saying that in the absence of the required action, proceedings would be commenced in relation to the property title.

On XX XXXX 20XX, a relative of the second spouse emailed you that the second spouse had not completed the search for the title due to their age and health, which limited their capacity. The relative would assist when asked for help and that if it wasn't found, would assist in having a new title issued. Through your solicitors, you informed the second spouse's relative that you would wait until XX XXXX 20XX and if it could not be located, your solicitors would provide documentation to support the application to replace it.

On XX XXXX 20XX, the second spouse informed your solicitors by letter that they had found the title, and that they did not want you to have it. Rather than hand over the title, they could present the title and the transmission application to the Titles Office.

On XX XXXX 20XX, you and the co-executor acquiesced in this, and your solicitors sent the transfer documents with a cheque for payment of the registration fees.

In XXXX 20XX, as you received no response from the second spouse or the second spouse's relative confirming that the documents had been lodged at the Land Titles Office, your solicitors wrote to the second spouse again but received no evidence that the title had been changed.

In XXXX 20XX, your solicitors registered a caveat on the title to the property to protect your interests.

From XXXX 20XX to XXXX 20XX, there was correspondence between your solicitors and the second spouse's relative regarding payment and/or reimbursement from the second spouse to you and the co-executor for the payment of rates and house insurance premiums on the property.

On XX XXXX 20XX, the second spouse died.

From XXXX 20XX to XXXX 20XX, there was correspondence with the second spouse's relative regarding property rates.

On XX XXXX 20XX, you and the co-executor were first informed that the second spouse had died by an email from the second spouse's executor.

As of XX XXXX 20XX,no application for a Grant of Probate had been filed in relation to the second spouse's will. As this was necessary to sell the house, you wrote to the second spouse's executor saying that unless there was evidence of progress within XX days, an application would be made to the court to have State Trustees appointed to take control of the second spouse's estate.

At the end of XXXX 20XX, the second spouse's executor informed your solicitors of the name of the solicitors they were engaging for the second spouse's estate.

On XX XXXX 20XX, probate of the second spouse's will was granted to the second spouse's executor.

In XXXX 20XX, you and the co-executor authorised lawyers to register the documents you had provided years previously at the Land Titles Office to put your names on title for the deceased's share of the house.

In XXXX 20XX, through your solicitors you continually pressed the second spouse's executor through their lawyers to get the house on the market for sale.

From XXXX 20XX to XXXX 20XX,you did what you could to expedite matters, but the second spouse's executor insisted on total control and on proceeding as they determined. The property, needed to be cleared and prepared for sale. This meant repairs as there was water damage as well as repairs to the roof and gutters, a complete overhaul of the garden with small trees having to be removed or cut back, clearing out of a vast amount of clothing, books, videos, and objects, which went to the relatives of the second spouse, opportunity shops or the tip.

You, with the agent's help, employed a gardener. The second spouse's executor insisted on doing everything else, although anything they identified as belonging to the deceased (clothing, shoes, books, papers) the second spouse's executor asked you to remove, which you did. You have a receipt of over $X which you paid to the gardener, having offered to do this to urge the second spouse's executor to press on. They would not agree to jointly employ anyone to clear the house or carry out repairs because they considered themself capable and did not want the expense.

From XXXX to XXXX 20XX, despite requests for access, which was not provided, you had nothing to do with the property until you met the second spouse's executor and their spouse there to meet with real estate agents and to decide which will to sell the property.

On XX XXXX 20XX, the second spouse's executor obtained a valuation of the property from X Pty Ltd.

In XXXX 20XX, the second spouse's executor agreed to sell their ownership interest in the property. Although you had been pressing the second spouse's executor to have the property put on the market from early 20XX, it was not until after they had received a valuation report that they agreed to meet with a selection of estate agents from which you agreed to choose one. At this time that the second spouse's executor, along with you, authorised the estate agents to put the property on the market.

XX XXXX 20XX. The date on which the second spouse's executor formally authorised the sale of their interest in the property. This was when signatories for both estates signed the Agreement provided by the lawyers.

On XX XXXX 20XX, the property went to auction.

On XX XXXX 20XX, the Contract of Sale was signed.

On XX XXXX 20XX, settlement occurred.

Relevant legislative provisions

Income Tax Assessment Act ITAA 1997 section 118-195