Edited version of private advice

Authorisation Number: 1052251987930

Date of advice: 16 May 2024

Ruling

Subject: Commissioner's discretion - deceased estate

Question

Will the Commissioner exercise the discretion under section 118-195 of Income Tax Assessment Act 1997 to allow an extension of time for you to dispose of your ownership interest in the dwelling acquired from a deceased estate 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 and 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 30 June 20XX

The scheme commenced on:

XX July 20XX

Relevant facts and circumstances

The deceased passed away on XX XX 20XX.

The deceased was never married and had no children.

At the time of the deceased passing, the deceased owned a property located at XXX (the property).

The property was purchased solely by the deceased on XX XX 19XX.

The property was the main residence of the deceased until their passing.

The property was never used for the purpose of producing income during the deceased ownership.

The property is less than 2 hectares in size.

XXX and XXX, relatives of the deceased, assumed the deceased had died intestate.

XXX and XXX engaged lawyers on X XX 20XX to assist with the administration of the estate.

The lawyers applied for the letters of administration for the deceased's estate on behalf of XXX and XXX.

The lawyers identified the assets and liabilities of the estate and conducted genealogy searches.

The deceased's bank accounts were closed, funeral expenses paid, and balance of funds were held in the lawyers' trust account.

The lawyers performed several searches to locate the deceased's will and also made written applications to obtain the original title of the property.

Supreme Court of XXX granted the letters of administration on X XX 20XX, appointing XXX and XXX as the joint administrators to the estate of the deceased.

On receipt of the authority from the Supreme Court of XXX, the administrators took immediate action to commence the sale of the property which comprised of engaging a real estate agent, obtaining a market valuation of the property, cleaning and conveyancing.

The property was put on the market and listed for sale in XX 20XX.

The property was sold at an auction held in XX 20XX.

The terms of settlement were 120 days which would result in settlement occurring on XX XX 20XX.

To complete the sale of the property and PEXA settlement, the administrators were required to make a lost title application.

During the lost title application, the administrators discovered that the title of the property was issued to XXX. This discovery was made on XX XX 20XX.

XXX advised the administrators, on X XX 20XX, that they did not hold a certificate of title for the deceased, instead they held a will dated X XX 19XX.

The lost title application was then completed by the lawyers and a replacement of the lost title was received on X XX 20XX.

The sale of the property was reliant on the purchaser selling their existing main residence to obtain the necessary funds for the acquisition of the deceased's property.

The purchaser of the property had difficulties in selling their main residence. On X XX 20XX they requested additional time to provide the necessary funds to settle the property.

Settlement of the property was completed on XX XX 20XX.

After successive COVID lockdowns in XXX, the lawyers finally received the original will from XXX on XX XX 20XX.

The deceased's will appointed the parents as the executors who were also the named as the beneficiaries of the estate.

The parents pre-deceased the deceased and the State Trustees Limited (STL) was named as the alternate executor in the will.

The lawyers, acting on behalf of the administrators, contacted STL to advise that the original will of the client had been located.

The lawyers advised that the estate had been largely administered, all bank accounts held by the client had been closed and the property had been sold and settled. The funds were held by the lawyers on trust on behalf of the estate.

On XX XX 20XX, STL sought to revoke the grant of probate upon intestacy and prove the will. Summons for revocation was filed with the Supreme Court of XXX by STL.

STL was granted probate on XX XX 20XX, and the previous probate was revoked.

The lawyers provided the State Trustee Office with a detailed chronology of the work undertaken.

A list of chronology events was attached to the application. There were several delays in the administration of the estate due to the COVID lockdowns in XXX which impacted the process of obtaining the relevant documentation and conducting searches on the property for a valid will.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195