Edited version of private advice

Authorisation Number: 1052269308918

Date of advice: 9 July 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 ended DD/MM/20YY

The scheme commenced on:

DD/MM/20YY

Relevant facts and circumstances

The deceased passed away on XX/XX/20XX leaving a will (the will).

As at date of death, the deceased owned a property at XXX, which was their main residence.

The will named the deceased's spouse and children as joint executors and trustees.

The will granted the deceased's spouse the right to reside in the property for as long as they wished.

In MM/20YY, the named executors engaged the legal services of Company A to assist with the estate administration.

Company A advised they were unable to assist and in late MM/20YY, they referred the matter to a new law firm, Company B.

From MM/20YY, there were further conflicts in relation to the division of the estate and application for probate and the new law firm were unable to apply for a Grant of Probate for the named executors.

On DD/MM/20YY, the deceased's spouse commenced formal legal proceedings to seek further provisions from the estate.

The parties were referred from Company B to independent legal representation who were separately engaged in the deceased's spouse proceedings. Company B were unable to take further action in respect of the application for probate whilst the deceased's spouse's proceedings remained unresolved.

The deceased's spouse's legal proceedings were settled by a Supreme Court Order dated DD/MM/20YY and the court orders also provided that the parties agreed to a court appointed independent administrator being nominated to act as administrator of the deceased's estate.

On DD/MM/20YY, in accordance with the Court Order, the deceased's spouse moved out of the property.

On DD/MM/20YY, XXX (the administrator) applied for Letters of Administration as the Court appointed independent administrator.

The administrator was unable to apply for Letters of Administration any earlier as there was further conflict between the named executors and beneficiaries of the estate in relation to the operation of the Court Order and the distribution of the deceased's personal items.

On DD/MM/20YY, the Supreme Court issued a requisition, and an amendment to the basis of grant was required. The administrator's response to the requisition was provided to the courts the following day.

On DD/MM/20YY, the administrator was granted Letters of Administration.

On DD/MM/20YY, the administrator listed the property for sale.

On DD/MM/20YY, the administrator executed a contract to sell the property, and settlement occurred a few weeks later.

At all material times, the property was not used for producing assessable income.

The property is less than 2 hectares in size.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195