Edited version of private advice

Authorisation Number: 1052338218565

Date of advice: 06 December 2024

Ruling

Subject: Commissioner's discretion - deceased estate

Question 1

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 1

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 ending XX June 20XX

The scheme commenced on:

XX November 20XX

Relevant facts and circumstances

On DD MM YY the deceased and spouse purchased the residential property at XXXX.

On DD MM YY the deceased signed their will.

In DD MM YY the deceased moved into a nursing home due to their old age and frail health.

On DD MM YY following the death of their spouse, the deceased was appointed as the sole proprietor of the property via survivorship.

On DD MM YY the deceased passed away.

Prior to the deceased's passing they occupied the property as their principal place of residence.

The dwelling has not been used to produce assessable income.

XXXX is the Trustee of the Estate of the deceased.

The beneficiaries of the estate are the three children of the deceased.

On DD MM YY Grant of Probate was obtained. Delays in obtaining the Grant of Probate were encountered.

Prior to deceased's passing, the dwelling was occupied by their family members in accordance with arrangements made before their passing.

The occupants refused to engage with the Trustee of the Estate and vacate the property.

The Trustee of the Estate made multiple attempts to communicate with the occupants of the property with hopes of reaching a mutual agreement for the occupants to vacate the property and make necessary arrangements. The occupants did not respond.

Given the lack of motivation and cooperation, on DD MM YY, the Trustee of the Estate engaged their Client Legal Department for the purpose of evicting the occupants. Multiple attempts were made by the Trustee of the Estate legal department to contact the occupants, and Notices to Vacate were issued. The occupants did not respond to these communications and did not vacate the property as requested.

The Trustee of the Estate subsequently proceeded with an application to the County Court of XXXX for a possession order. On DD MM YY, the Trustee of the Estate filed the application to the court. On DD MM YY, the court order was granted.

On DD MM YY, possession orders were made. However, the judge issued a stay of XX days execution of the orders. Therefore, The Trustee of the Estate could not issue a warrant of possession until DD MM YY.

The Trustee of the Estate was subsequently contacted by concerned family members of the occupants, who provided STL with an undertaking that they would assist the occupants to vacate the property by DD MM YY.

On DD MM YY some occupants vacated the property.

One occupant refused to vacate the property. They were formally evicted from the property by the Sheriff's Office on DD MM YY.

Following the eviction of the occupants, The Trustee of the Estate immediately commenced the sale process of the property. Upon returning to the property to prepare it for sale, The Trustee of the Estate discovered that the locks had been changed and that the remaining occupant had returned to the property.

The Trustee of the Estate exhausted many options to regain possession of the property. Police assisted with removing the remaining occupant from the property. Subsequently, The Trustee of the Estate arranged for a security guard to safeguard the property and to stop the remaining occupant gaining access to it.

The Trustee of the Estate re-commenced activities to sell the property. The public auction was arranged for DD MM YY. Prior to auction, The Trustee of the Estate organised for the property to be thoroughly cleaned, obtained a valuation, engaged the real estate agent, and obtained a clearance certificate from the council and state revenue office.

On DD MM YY the property sold.

On DD MM YY the property settled.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195