Edited version of private advice

Authorisation Number: 1052307005789

NOTICE

This private ruling was revised following an issue. This edited version has therefore been replaced with the edited version of the private ruling with the authorisation number of 1052324634651.

Date of advice: 23 October 2024

Ruling

Subject: Commissioner's discretion - deceased estates

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 and extension of time. Further information about the Commissioner's discretion can be found be searching ato.gov.au for 'QC 66057'.

This ruling applies for the following period:

1 July 20XX

The scheme commenced on:

DD MM 20XX

Relevant facts and circumstances

On DD MM 19XX, the deceased was born in another country.

On or about 19XX to 19XX, the deceased became a permanent resident and citizen of Australia.

On DD MM 20XX, the deceased passed away.

At the date of death, the deceased owned a property in Australia.

On DD MM 19XX, the deceased acquired the property.

The property was the main residence of the deceased just before they passed away and was not used to produce assessable income.

The property was situated on less than two hectares of land.

The deceased also owned a one-half interest in an investment property. The deceased did not reside in the investment property at any time and it was owned solely for investment purposes.

The deceased had a will which appointed executors and trustees of the estate.

On DD MM 20XX, probate was granted to the executors by the Supreme Court.

Family provision claim

During the administration of the estate, the executors had to address claims from an individual asserting their right to the estate under the Testator's Family Maintenance Act 1912 (TAS). Although the individual did not formally file a claim, it was anticipated. Consequently, correspondence and negotiations took place during the estate administration to avoid the time and cost of a potential formal proceeding to resolve the matter.

Legal representation transfer

Following the deceased's death, the executors initially engaged lawyers in state A to assist with the estate to identify estate assets and liabilities. However, after some investigation it became clear that the estate had a greater connection with state B which required estate administration and application for a grant of probate to be administered in state B. As a result, the executors sought new legal representation in state B. Consequently, this caused general delays in the administration process (in relation to identifying estate assets and liabilities and arranging for all correspondence and enquiries to be redirected to the executor's lawyers in state B).

Absence from Australia

The deceased's history also introduced an international aspect of the estate, complicating the identification and collection of all assets and causing general delays in the administration process.

Between the deceased's acquisition of the property in 20XX, and 20XX, the deceased lived in:

(a)  Australia (residing exclusively in the property) for approximately 6 months out of each calendar ear, and

(b)  Country B for approximately 6 months out of each calendar year.

In 20XX, the deceased ceased travelling to Country B and resided exclusively in Australia, in the property. The deceased remained a resident in the property until his death.

Administration of property

Early in the administration process, the residuary beneficiary expressed a desire to receive the property as an in specie distribution, meaning the asset would be transferred without being converted to cash. In light of this request, the executors were initially reluctant to list the property for sale, aiming to honour the beneficiary's instructions.

However, once all estate assets were accounted for, it became clear that there were not enough other assets to cover the specific gits and liabilities of the estate without selling the property. Consequently, upon confirming that the property needed to be sold to meet these obligations, the executors promptly listed it for sale.

On DD MM 20XX, an agency agreement was entered into.

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

On DD MM 20XX the property settled.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195