Edited version of private advice

Authorisation Number: 1052344451643

Date of advice: 17 December 2024

Ruling

Subject: CGT - deceased estate

Question

Will the Commissioner exercise his 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 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:

Income year ending 30 June 20XX

The scheme commenced on:

XX XXXX 20XX

Relevant facts and circumstances

On XX XXXX 20XX, the deceased died.

The deceased was survived by their children.

The deceased's Will is dated XX XXXX 20XX (the Will).

The Will names three beneficiaries: beneficiary 1, beneficiary 2 and beneficiary 3.

The Will included the property. The property was the main residence of the deceased at the time of their passing.

The will provided that:

•                     beneficiary 2 and beneficiary 3 were appointed as executors and trustees of the deceased's estate;

•                     beneficiary 3 was permitted to live in the deceased's residence during their lifetime;

•                     upon beneficiary 3's death or on their election to leave the deceased's residence, the residence was to be devised and bequeathed to the deceased's surviving children as tenants in common in equal shares.

XX XXXX 20XX, beneficiary 3 died.

XX XXXX 20XX, the deceased's surviving executor, beneficiary 2, applied for a grant of probate for the Will.

On XX XXXX 20XX, probate was granted to beneficiary 2.

In late XXXX 20XX, beneficiary 1 was advised in that probate had been granted and it would take X months from the date of the grant being made to settle the estate.

Between XX XXXX 20XX when probate was granted and XX XXXX 20XX when beneficiary 1 commenced proceedings, there was ongoing correspondence between beneficiary 1, beneficiary 2, and also beneficiary 2's solicitors during this period regarding the administration of the estate.

In XXXX 20XX, beneficiary 1 engaged lawyers and instructed them to act on their behalf,

On XX XXXX 20XX, beneficiary 1 commenced legal proceedings seeking orders, amongst other things, to have beneficiary 2 removed as executor and trustee of the deceased's estate due to their failure to:

•                     provide a true and proper accounting of the estate assets;

•                     act in a timely manner to administer the estate of the deceased; and

•                     act in the best interest of the beneficiaries of the estate.

On XX XXXX 20XX, the parties agreed to terms of settlement which appointed a solicitor as the administrator of the estate. In the same settlement, beneficiary 2 agreed to vacate the property within X days of a written request by the Administrator but in any event no later than XX XXXX 20XX.

XX XXXX 20XX was set as the trial date.

On XX XXXX 20XX, the Court issued orders (dated XX XXXX 20XX) appointing the solicitor as administrator and trustee of the estate and discharging beneficiary 2 as executor and trustee.

Beneficiary 2 was residing in the property and it took some time to have them removed so that the property could be placed on the market. You made repeated requests, following which beneficiary 2 was put on notice that they were in breaching the terms of the settlement and Court orders. You also requested that the property agent assist beneficiary 2 with finding rental accommodation so that they could vacate quicker. In the end, action was taken to arrange for the property locks to be changed.

In XXXX 20XX, the property was vacated and prepared for sale.

In XXXX 20XX, the property was placed on the market.

On XX XXXX 20XX, the property was sold, subject to finance, which was confirmed on XX XXXX 20XX.

On XX XXXX 20XX, settlement of the sale was completed.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195