Edited version of private advice

Authorisation Number: 1052322434988

Date of advice: 28 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 (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:

1 July 20XX

Relevant facts and circumstances

In mid 20XX the deceased died intestate, leaving no surviving spouse or children.

Over a decade prior to the deceased's death, the deceased acquired a property (the property), and it was the deceased's principal place of residence from the date they purchased it until their death.

The property is less than 2 hectares in size.

A solicitor (the solicitor) was appointed as the administrator of the deceased's estate.

As the deceased died intestate, it was necessary to:

•                     Carry out extensive searches for a will.

•                     Arrange affidavit evidence as to the searches made for a will at the deceased's home, with the deceased's bank, the State Trustee and Guardian, and also with any prior solicitors who had acted for the deceased.

•                     Disclose email printouts located in the deceased's residence containing notes regarding a will that they were contemplating making and address their status in the affidavit.

•                     Carry out genealogical searches to identify the deceased's next of kin.

•                     Obtain copies of all relevant birth certificates, death certificates, and marriage certificates from Country A and arrange to have those certificates translated to English by an accredited translator, as the deceased's native home was formerly overseas in Country A, and all relevant family members are residents in Country A.

•                     Obtain an affidavit from a close friend confirming that the deceased was not in a de facto relationship.

•                     Obtain a copy of an adoption order from Country A, as the sole beneficiary of the estate (the deceased's relative) resides in Country A and is an adopted child of the deceased's late sibling.

Further reasons for the delay in selling the property

The impact of the travel and other restrictions imposed in Australia and Country A due to COVID 19.

This made the process of obtaining the required certificates and affidavit's more complex and significantly longer than it would have been without those restrictions.

Requisitions from the Supreme Court of State A (in Australia) required a supplementary affidavit setting out further information in relation to the deceased's parents and sibling, all of whom had predeceased the deceased and required additional death certificates from Country A in respect of those family members.

The Grant of Letters of Administration was not made until late 20XX, a few years after the deceased's death.

Once the Grant of Letters of Administration was made, the property was prepared for sale and placed on the market as soon as possible.

The preparation of the property for sale involved the sole beneficiary of the estate coming from Country A in late 20YY (a few weeks after Letters of Administration was granted) to clear the deceased's belongings from the property, carrying out some necessary repair works, along with some minor cosmetic works to the property.

The solicitor appointed a real estate agent to sell the property in early 20XX (a few weeks after the minor work on the property was completed).

The title of the property was transferred to the solicitor's name as the Administrator of the estate in early 20XX.

The property was sold shortly after this in early 20XX, with settlement occurring a few weeks later in early- to-mid 20XX.

The property was not used for income purposes by the deceased during their lifetime, nor was it used for income purposes from the date of their death to the date it was sold.

The property was vacant from the date of death until it was sold.

Relevant legislative provision

Income Tax Assessment Act 1997 Section 118-195