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Edited version of private advice
Authorisation Number: 1052352158608
Date of advice: 17 January 2025
Ruling
Subject: Commissioner discretion - deceased estates
Question 1
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 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 ended XX XXXX
The scheme commenced on:
XX XXXX 20YY
Relevant facts and circumstances
On XX XXXX 19YY, The Deceased, Person 1 and Person 2 acquired the Property.
The Property was the main residence of the Deceased since its acquisition.
Person 1 the wife of the Deceased passed away on XX XXXX 20YY.
The Deceased passed away on XX XXXX 20YY.
The registration of the Property as at the date of death of the Deceased was as follows:
• Two-thirds ownership interests held jointly by the Deceased and their late spouse Person 1.
• One-third ownership interest held as sole proprietor, Person 2.
As at the date of death of the Deceased a mortgage over the Property existed in favour of Company 1. This loan was taken out in the names of the Deceased, Person 1 and Person 2.
Up until the date of death of the Deceased, Person 2 tended to the repayments of the mortgage. After the Deceased passed away Person 2 failed to meet the mortgage repayments.
After the Deceased passed away, Person 3 advised Person 4 and Person 2 that she would attend to the affairs of the Deceased estate.
Person 4 attempted multiple times to contact Person 3 and Person 2 throughout 20YY in relation to issues surrounding the mortgage over the property. Person 2 failed to respond to these requests for information, however Person 3 advised that they were having difficulties associated with the mortgage on the Property. Person 4 did not know, or ask, whether Person 3 had taken steps to apply for probate for the estate of the Deceased.
In XXXX 20YY, Person 4 discovered that Company 1 had requested for Person 2 to tend to payments of the mortgage. Person 2 did not advise Person 3 or 4 of the mortgage underpayment.
On XX XXXX 20YY, Person 3 passed away due to a prolonged illness.
On XX XXXX 20YY, Company 1 wrote to Person 2 seeking a copy of the Deceased's Will. Person 2 believed that the Deceased possessed a Will at this time.
On XX XXXX 20YY, Company 1 wrote again to Person 2 and requested the death certificate and Will of the Deceased.
On XX XXXX 20YY, Person 4 engaged a legal practitioner to assist with the administration of both the Deceased and Person 3's estates, and the mortgage issue with Company 1.
On XX XXXX 20YY, the Estates legal practitioner advised Company 1 and Person 2 that Person 4 was taking steps to obtain Letters of Administration (LOA) for the estate of the Deceased, as it was discovered no Will existed.
On XX XXXX 20YY, Company 1's lawyer advised Person 2 and 4 that they had issued legal proceedings for mortgage possession of the Property. The Estates legal practitioner responded to Company 1's lawyer and negotiated a stay of proceedings to effectuate a sale, with written advice to Company 1 advising of steps taken to prepare the application for LOA.
On XX XXXX 20YY, Company 1's lawyer agreed to withhold recovery proceedings if probate was obtained on or before XX XXXX 20YY.
On XX XXXX 20YY, a grant of LOA was issued to Person 4. Person 4 commenced preparing the property for sale through attending to rubbish and repairs.
On XX XXXX 20YY, Person 2 and 4 signed an agency sales agreement and instructed the agency that the property was to be sold as soon as possible.
On XX XXXX 20YY, the Property a contract of sale was signed, and settlement took place on XX XXXX 20YY.
The Property was never used to produce income.
The Property remained vacant from the date of the Deceased's passing and the settlement date.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-195