Edited version of private advice

Authorisation Number: 1052255614963

Date of advice: 28 May 2024

Ruling

Subject: Commissioner's discretion - deceased estates

Question 1

Will the Commissioner confirm the transfer of the property by the initial trustee as void and not affect the Estates ability to satisfy the requirements of section 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes.

There was no transfer of property if the transaction giving rise to it is rendered void. Taxation Ruling TR 94/29 paragraph 23 has further information about treating a transaction as never having come into existence.

Question 2

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 any capital gain or loss you make on disposal?

Answer

Yes.

Having considered your circumstances and the relevant factors the Commissioner will allow an extension of time. Further information about this discretion can be found by searching 'QC 66057' on ato.gov.au.

This ruling applies for the following periods:

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

The deceased passed away on XX/XX/20XX.

The dwelling is located at XX and was purchased on XX/XX/20XX.

The deceased acquired the property after 20 September 1985.

The property was a 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.

The Will provided for the right to reside for the deceased spouse XX and the youngest child.

The property could not be sold until XXX ceased residing in the property or failed to comply with the conditions of the Will.

This provision was until either the XX remarries, the youngest child turns XX years of age, or the property was not properly maintained.

Once this occurs, the property becomes a gifted residual asset in a XXXX. The XXXX trust would have the deceased XXXX as the primary beneficiaries, and it will vest once the youngest child turns XX years old.

The Trustee was initially Mr XX.

On XX/XX/20XX, the trustee XXXX and transferred the property to himself as the personal representative.

On XX/XX/20XX, the trustee subsequently transferred the property to himself as trustee of XXXX.

At the time of these initial transfers, the deceased youngest child had not attained the age of XX and XXX had not remarried or re-partnered.

On XX/XX/20XX, XX filed an application commencing family proceedings against the Estate and continued to be litigated including a settlement offer up to XX/XX/20XX.

From XX/XX/20XX to XX/XX/20XX, XX rejected the offer and refused to engage further and a litigation guardian for the deceased minor children was appointed.

On XX/XX/20XX, legal proceedings were initiated in the XXX court.

On XX/XX/20XX, there was a final order with change of the executor to the new administrator Mr XX.

On XX/XX/20XX, the proceedings transferred to another court and the dispute was resolved by a Deed of settlement on XX/XX/20XX.

Following the XXX court proceedings, the property vested and was registered in the administrator's name as the legal personal representative.

The property was listed for sale soon after the legal proceeding were finalised.

You entered into a contract 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