Edited version of private advice

Authorisation Number: 1052281581559

Date of advice: 31 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 30 June 20XX

The scheme commenced on:

DD MM 20XX

Relevant facts and circumstances

The deceased passed away on DD MM 20XX.

The deceased owned a property at the date of their death. 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 deceased acquired the property after 20 September 1985.

The property is less than 2 hectares.

The deceased had a will dated DD MM 20XX which appointed Person A as executor.

At the time of the deceased's death Person B was also living at the property as their main residence. Person B refused to leave the property, claiming that they were owed money by the estate in relation to the property.

In MM 20XX, Person B instructed their legal representation to put the estate on notice for a potential family provision claim.

Between MM 20XX to MM 20XX, Person A approached their own legal representation to attend to both the estate administration and family provision dispute. This included Person A seeking assistance from his legal representation for the decision not to take on the role of executor.

Between the period of MM 20XX to MM 20XX, Person A's legal representation commenced work on getting the estate affairs in order. This also included obtaining election forms from the named beneficiaries as to who would be the executor of the estate for the application of probate.

Between the period of MM 20XX to MM 20XX, Person B's legal representation lodged documents to have the Trustee & Guardian appointed as administrators. Further information was gathered around getting the estates affairs in order. During this period, it was also decided by Person A that an application for probate would be completed by their legal representation.

On DD MM 20XX, probate was granted to Person A (Executor) as executor.

Between the period of MM 20XX to MM 20XX, further work was completed around getting the estate affairs in order by the executor's legal representation. This work also included attempted resolution for the dispute between Person B and the executor.

On DD MM 20XX, an application to the Supreme Court was made following failed negotiations to resolve the issues between Person B and the executor. A summons was subsequently filed also.

Between the period of MM 20XX to MM 20XX, further work was completed by the executors legal representation and mediators to negotiate and resolve the dispute between Person B and the executor to get the estates affairs in order.

On DD MM 20XX, court orders were made for the property to be vacated and sold.

Between the period of MM 20XX and MM 20XX, various works between Person B and the executors legal representations were conducted to resolve the family provision claim under a deed of settlement.

On DD MM 20XX, the executor entered into a contract to sell the property.

On DD MM 20XX the property settled.

On DD MM 20XX a deed of settlement was signed by the parties.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195

Income Tax Assessment Act 1997 section 104-10

Income Tax Assessment Act 1998 section 118-130(3)