Edited version of private advice

Authorisation Number: 1052255803480

Date of advice: 4 June 2024

Ruling

Subject: Commissioner's discretion - deceased estate

Question

Will the Commissioner allow an extension of time for you to dispose of your ownership interest in the dwelling and disregard the capital gain you make on the disposal?

Answer

Yes. Having considered your circumstances and the relevant factors, the Commissioner will allow an extension of time.

This private ruling applies for the following period:

1 July 20XX to 30 June 20XX.

The scheme commences on:

1 July 20XX.

Relevant facts and circumstances

The deceased passed away.

The deceased and spouse purchased the dwelling pre- CGT.

The dwelling was the family home throughout their marriage.

On the passing of the deceased's spouse, they acquired their title ownership share of the dwelling.

The deceased continued to reside at the property until their health began to decline.

The deceased commenced residing with family due to health reasons.

All belongings of the deceased remained at the property and the property was not used for income producing purposes throughout their whole ownership period.

The will of the deceased provided the following:

•         Appointed an executor and trustee of their will.

•         The estate was given to the trustee on trust to give effect to the gifts and directions of the will.

•         The benefit was to be paid to the trustee to distribute as part of the balance of the estate.

•         Personal effects and household contents to be provided to their children.

•         Balance of the estate to be distributed by the trustee, dividing into equal parts between the children and distributed to each trust and subject to the provisions of the will.

For the deceased's final years, they resided with family due to health reasons, they transferred half of their title share of the property to the family member as joint tenants.

The deceased transferred half of their title ownership of a second property owned on trust to the family member as join tenants.

The children commenced legal action in relation to the transfer of trust assets gifted to a family trust.

The trustee initiated legal action against the family member in relation to the transfer of the property on the basis the deceased was under undue influence when transferring title ownership.

The trustee was appointed to manage the deceased's financial legal matters.

The court declared the transfer of title for the 2 properties between the deceased and the family member were avoided. Further, the trustee was to be registered as the sole proprietor of the properties and the family member removed from the titles.

Ownership of the property was registered in the name of the trustees.

Ownership of the property was transferred to the trustees of the trusts created under the deceased's will.

The trustee notified the trustee's the transfer was finalised.

Once the trustees had access to the dwelling, they quickly undertook the following actions to prepare the property for sale:

•         Removed personal items and furniture.

•         The property was professionally cleaned and they removed overgrown gardens and shrubs.

•         There were no improvements conducted to the property before marketing for sale.

The property was sold under contract short time after being actively marketed for sale.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195