Edited version of private advice

Authorisation Number: 1052350041451

Date of advice: 14 January 2025

Ruling

Subject: Commissioner's discretion - deceased estate

Question

Will the Commissioner exercise the discretion under section 118-195 of 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 to dispose of the dwellings purchased before 20 September 1985. 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:

1 July 20XX to 30 June 20XX

The scheme commenced on:

XX XX 20XX

Relevant facts and circumstances

Your parent (the deceased) passed away on XX XX 20XX.

The deceased appointed you and your sibling executors of the Will and trustees of their estate as tenants in common in equal shares.

The properties were acquired by the deceased before 20 September 1985 and were not the deceased's main residence.

After the deceased passed, you discovered substantial number of the deceased's assets had been misappropriated by your sibling in contravention of their duties as financial power of attorney.

As soon as this was discovered, you obtained the deceased's financial statements. This delayed administrating the estate as you had to liaise with the banks and review the financial statements.

In XX 20XX, you appointed lawyers to represent you to contest the financial misappropriation of the deceased's assets.

On XX XX 20XX, probate was granted.

On XX XX 20XX, leave reserved was granted for probate to your sibling.

Listing the properties for sale were delayed for the following reasons:

•                     The first property had squatters in the property that refused to leave. You changed the locks and went to police station to have them removed. Even though there was evidence someone was residing at the property the police were unable to evict the squatters.

•                     The second property had non-paying tenants in the house.

•                     On XX XX 20XX, you commenced action through VCAT to have the tenants removed. This process was delayed due to COVID and not being able to attend the meetings due to covid lockdown restrictions.

•                     The tenants failed to attend the VCAT meeting and VCAT issued an eviction order.

You hired a forensic accountant to review all the deceased's financial data as the amount of financial deception was becoming quite complex to review.

On XX XX 20XX, the forensic accountant's report was completed.

On XX XX 20XX, Supreme Court mediation commenced to contend the misuse of the deceased's assets.

On XX XX 20XX, mediation through the Supreme Court was finalised. Due to the significant amount of money and assets taken from the estate by your sibling, the order settled with the properties to be transferred to you as beneficiary of the deceased estate.

On XX XX 20XX, you engaged a real-estate agent to list the properties for sale.

On XX XX 20XX, the titles of the properties were transferred into your name.

On XX XX 20XX, the contract for sale was signed for property A and settlement occurred on XX XX 20XX.

On XX XX 20XX, the contract for sale was signed for property B and settlement occurred on XX XX 20XX.

Relevant legislative provisions

Section 118-195Income Tax Assessment Act 1997