Edited version of private advice

Authorisation Number: 1052314783223

Date of advice: 9 October 2024

Ruling

Subject: Commissioner's discretion - deceased estate

Question

Will the Commissioner exercise the discretion under section 118-195 of Income Tax Assessment Act 1997 to allow an extension of time for you to dispose of your ownership interest in the dwelling acquired from a deceased estate 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 by searching ato.gov.au for 'QC 66057'.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commenced on:

XX XX 20XX

Relevant facts and circumstances

On XX XX 20XX XX XX (the deceased) passed away.

At date of passing, the deceased owned a property at XX XX XX (the property).

The property was purchased on XX XX 19XX.

The property is less than 2 hectares in size.

The deceased was the sole owner of the property when they died, and at that time it was their main residence and not being used to produce income.

During the first 2 years after the deceased death, the administration of the estate was delayed in obtaining the grant of Probate from the Supreme Court of XX due to validity of the executor clause, execution of the Syndic notices from XX different charitable organisations.

The deceased was never married and had no children of their own.

The will and death certificate confirmed that the property was the deceased's current residential address and that they were residing in the property at the time of their death.

There were no capital improvements made to the property after their death.

The deceased left a will dated XX XX 20XX which is unrevoked. The will appointed XX XX solicitor as executor who is deceased.

The substitute executor is the principal solicitor of the Lawyer 1.

An application for Letters of Administration was made by XX XX of XX XX Lawyer 2 (XX Lawyers) who took over the legal practice of Lawyer 3.

On XX XX 20XX, the Registrar of Probates declined the application on the basis that the substitute executor clause was void for uncertainty.

The executor clause of the will had failed and therefore the beneficiary with the greatest entitlement to the estate was entitled to either administer the estate or authorise a trustee company such as State Trustees Limited (STL) to do so.

The beneficiaries with the greatest shares of the estate were XX charitable organisations.

The next greatest entitlement among other individual beneficiaries was bequeathed to person A.

Person A was in a domestic relationship with the deceased at the time of their death.

STL was contacted by Lawyer 3 in XX 20XX to advise of the issue of an unadministered estate and that their application had been refused by the courts.

Lawyer 3 also advised STL to liaise with relevant beneficiaries to seek administration of the estate.

On XX XX 20XX Lawyer 3 received an email from XX XX of Lawyer 4 advising that person A intended to proceed with Letters of Administration (with will annexed) and had engaged XX XX Lawyer 5 to act for them in that application.

On XX XX 20XX, XX XX wrote to Lawyer 3 requesting documents relating to the estate which would assist them in applying for a Grant of Probate.

On XX XX 20XX these documents were provided to Lawyer 5.

No application for Probate was made by Lawyer 5.

On XX XX 20XX, Lawyer 6 wrote to XX XX Lawyer 4 explaining that the XX charitable organisations named beneficiaries in the estate are expected to execute Syndic Notices to indicate that they will not administer the estate.

Lawyer 6 requested XX to confirm person A intentions as Lawyer 6 understood that person A also intended to make a claim on the estate under Part IV, Family Provision Claim.

Lawyer 6 offered to assist in administering the estate to avoid this conflict of interest.

On XX XX 20XX, Lawyer 3 contacted Lawyer 6, Lawyer 4 and Lawyer 5 raising concerns from all other remaining beneficiaries regarding no application being made to date to administer the estate.

On XX XX 20XX, Lawyer 6 received a letter from Lawyer 4 confirming that due to potential conflict-of-interest, person A will not be applying for administration of the estate. At the same time, person A did not consent to authorise Lawyer 6 to administer the estate due to the issue of costs.

On XX XX 20XX, Lawyer 6 was again contacted by Lawyer 3 informing person A had passed away and requested Lawyer 6 to take on the administration of the estate. Accordingly, Lawyer 6 contacted all relevant parties again.

On XX XX 20XX, Lawyer 6 provided updates to all parties that 2 Syndic notices from sensitive (when completed) page XX charitable organisations were still pending to be received even after actively chasing them. To speed up the process, Lawyer 6 requested Lawyer 3 to arrange a signed authority from XX XX, who had the next highest entitlement, to sign the authority for Lawyer 6 to proceed with applying for Probate.

Grant could only be applied once XX authority and two outstanding Syndic notices were received. These pending notices were finally received on XX XX 20XX.

Lawyer 6 received written authority, signed dated XX XX 20XX from XX XX to apply for grant of letters of administration on XX XX 20XX.

The deceased's death certificate was issued on XX XX 20XX.

Once the death certificate was received, the application for grant of letters of administration was applied.

On XX XX 20XX Probate was granted to Lawyer 6.

Lawyer 6 immediately took possession of the property and commenced its process to put the property on the market.

Prior to the public auction, Lawyer 6 had arranged for the property to be thoroughly cleaned, valuation obtained, real estate agent engaged and obtaining clearance certificate from council and the state revenue office.

On XX XX 20XX conveyancing was engaged and blank sale of contract was provided to real estate agent on XX XX 20XX.

On XX XX 20XX a sworn valuation of property for auction reserve was received.

On XX XX 20XX a signed action authority was provided to the real estate agent.

On XX XX 20XX the property was sold.

On XX XX 20XX property settlement was completed.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195