Edited version of private advice

Authorisation Number: 1052251491124

Date of advice: 23 May 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 (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 after 20 September 1985.

The property was the main residence of the deceased just before they passed away and 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 executor applied for Probate.

On XX/XX/20XX, the executor received an email from Organisation One, who were the owners of a second property on the same block of land. Organisation One informed the executor that they were not able to sell the property until issues concerning strata laws were resolved.

Probate was granted on XX/XX/20XX.

In XX/20XX, several emails were exchanged with Organisation One. The executor learned that when the property was subdivided in 20XX, the developer should have held the first Annual General Meeting (AGM) of the newly formed strata property within several months of the registration of the strata titles scheme. This had not occurred and Organisation One informed the executor that they needed to hold the first AGM to clarify how insurance of the shared driveway was to be split between the two lots, and that without the minutes of the first AGM, they would be unable to sell the property.

On XX/XX/20XX, the executor attended the first AGM with Organisation One to clarify how insurance of the shared driveway and maintenance of the common areas was to be divided between the lots.

During XX/20XX and XX/20XX, several emails were exchanged with Organisation One and the minutes of the AGM were revised until both parties were satisfied with them.

On XX/XX/20XX, the executor commenced the process of selecting a realtor to sell the property, however the listing was delayed as the executor was waiting for Organisation One to advise them of how to proceed following the first AGM.

On XX/XX/20XX, Organisation One informed the executor that the paperwork required original signatures before it could be lodged with Organisation Two.

During XX/20XX and XX/20XX, Organisation One experienced staffing changes and the date for an in-person signing was delayed. This delay prevented the property from being listed for sale.

On XX/XX/20XX, whilst preparing to list the property for sale, the executor discovered that there was a caveat over the property. The caveat had been unknown prior to this date as the property had not been listed for sale earlier due to the dispute with Organisation One.

Prior to the deceased's death, the caveat was placed on the property to protect it from the owners of a neighbouring property, relating to the cost of a shared driveway.

As a result of the caveat, no property transactions could occur until it was lifted. Organisation Two advised that the caveat could only be lifted in person and could not be lifted remotely or by phone.

On XX/XX/20XX, the executor was unable to locate the original Duplicate Certificate of Title (DCOT) amongst the deceased's paperwork to surrender to Organisation Two. The executor then contacted a conveyancer to assist them in preparing an application for a replacement DCOT.

On XX/XX/20XX, the executor submitted two applications to Organisation Two. The first application was for them be the registered proprietor of land by transmission to Organisation Two. The second application was a Verification of Identity (VOI) application to confirm their identity as the executor and that they would be representing the deceased for lifting the caveat.

You contend that the executor could not travel interstate until XX/20XX, as there were travel restrictions in place due to Covid-19 until XX/XX/20XX.

On XX/XX/20XX, Organisation Two provided the executor with a Withdrawal of Caveat form to be completed. They were advised that to complete the form, they needed to attend the Organisation Two office to attend an interview and provide the original DCOT which needed to be surrendered to Organisation Two for them to reissue a new DCOT without the caveat.

During XX/20XX and XX/20XX, whilst waiting for the replacement DCOT to arrive, the executor unexpectedly located the original DCOT. During this time, they experienced health issues and were unable to travel to meet with Organisation Two in person to lift the caveat. On XX/XX/20XX, the executor booked a flight interstate which was scheduled for XX/XX/20XX.

On XX/XX/20XX, the executor contacted Organisation Two to arrange an appointment to lift the caveat in person.

On XX/XX/20XX the executor attended an in person meeting with Organisation Two to lift the caveat.

On XX/XX/20XX, a reissued Duplicate Certificate of Title (without the caveat attached) was issued from Organisation Two which allowed the process of selling the property to recommence.

During XX/20XX and XX/20XX, the executor 's sibling claimed that the deceased had borrowed money from them personally to purchase the property. There were questions as to the amount borrowed and the documentation to support this amount. In XX/20XX, a negotiated agreement was reached between all siblings.

In XX/20XX, research was conducted to select a new realtor to sell the property.

In XX/20XX, a realtor was engaged to market the property for sale.

A contract was entered into to sell the property on XX/XX/20XX with settlement occurring on XX/XX/20XX.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 118-195