Edited version of your private ruling

Authorisation Number: 1052318534304

Date of advice: 21 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 ended 30 June 20XX

The scheme commenced on:

XX XX 20XX

Relevant facts and circumstances

The deceased passed away on XX XX 20XX

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

The property was purchased in 19XX, renovated and became the family home in 20XX. The property has been the deceased's principal place of residence.

The property was held in the names of spouse of the deceased and the deceased at the time of purchase.

When the spouse of the deceased passed away on XX XX 20XX their equity in the property transferred to the deceased on XX XX 20XX.

Since becoming the principal place of residence, the property has not been an income earning property.

The deceased's child has resided in the property during approximately 12 years of the life of the deceased and this continued after his passing.

The deceased's child is a beneficiary of the estate and also considered in challenging the Will to take possession of the property.

The deceased left three children who are all beneficiaries of the estate.

One of the deceased's children resides in XXX, they were unable to come to Australia for the funeral.

They wanted to come to their late parent's funeral but due to the distance, significant work commitments and the cost to travel to Australia, due to coming out of Covid, it was extremely expensive.

The family did not want to start handling their parent's estate until they were able to meet in person to discuss further.

In XX 20XX when things settled at work and costs of travel decreased, they and their spouse were able to come to Australia. It was here that the three siblings had a meeting to discuss the estate.

In XX 20XX the three siblings understood that under the Will they were all appointed as executors of the estate. It was however decided between them that one of them would be the person who would handle the estate. Both of the other 2 siblings decided that it was best for one sibling to take on the role of executor.

After such decision was made the one executor in late XX 20XX formally engaged Lawyers to start the process.

Probate was issued on XX XX 20XX to the executor with leave being reserved to the other 2 prior executors.

In parallel the executor's partner was undergoing various medical appointments, tests, scans and biopsy and was diagnosed with an illness in early XX 20XX The partner required surgery to address their condition. The executor discussed with their siblings and Lawyers that at the moment they needed to pause settling their parent's estate while they cared for their partner.

In XX and XX of 20XX the executor's partner was scheduled for surgery, however in XX 20XX they fell ill with a medical condition. This required admission to hospital for several days to receive intravenous antibiotics. This required the sole executor to care for their partner for some weeks and also meant that the surgery needed to be rescheduled to a later date due to the risks.

In XX and XX 20XX the executor's partner underwent surgery for their illness which was followed by a lengthy recovery period with the sole executor once again providing primary care.

In XX 2023 the executor's partner was given all clear with respect to their health.

In XX 20XX the sole executor recommended dealing with their parent's estate.

On XX XX 20XX the lawyers received a letter from another lawyer firm who was representing one of the beneficiaries regarding a possible challenge against the estate in such letter the lawyers were informed that their client (one of the beneficiaries) lived with the deceased for approximately XX years prior to their passing during such time they were responsible for providing care to them. The lawyers were also informed that the beneficiary is XX years of age, and their only source of income was their disability pension of $X,XXX a week and had no other assets.

Rather than the estate being split in equal shares this beneficiary requested that they obtain the property and it be transferred to them and a lump sum of cash in the amount of $XXXX.

In XX 20XX and XX 20XX the lawyers and the executor responded to another lawyer's firm reinforcing that each sibling should only be receiving an equal third of the estate as outlined in the deceased will.

The executor continued to proceed with trying to finalise the estate.

In XX 20XX while further discussions were occurring the executor continued to arrange for quotes from various agents and in consultation with their siblings, to select an agent to sell the deceased property in XXXXXXXX, such property was sold, and settlement is due to take place on XX XX 20XX.

In XX 20XX a decision was reached between the siblings that the property would be place on the market. The executor arranged for quotes from various agents and in consultation with their siblings selected an agent to sell the property and prepared the home for sale and arrange for a conveyancer to prepare the necessary sales documents.

In XX 20XX the property was put on the market and was sold at auction on XX XX 20XX, with a 120-day settlement at the purchaser's request making the settlement date XX XX 20XX.

The property was listed for sale as soon as practically possible after circumstances regarding the beneficiary and potential challenge were resolved.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195