Edited version of private advice

Authorisation Number: 1052392725421

Date of advice: 6 May 2025

Ruling

Subject: Commissioner's discretion - deceased estates

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:

XX XXXX 20XX

Relevant facts and circumstances

Before 20 September 1985, the deceased acquired the dwelling at the property.

The property is less than 2 hectares in size.

On XX XXXX 20XX, the deceased executed their last Will.

In the deceased's last Will, they appointed Person A, Person B and Person C as executors.

Person A and Person C lived in a different state than the one where the property was situated.

The executors were some of the deceased's children.

Under clause X(x) to (x) of the Will, Person B was given a right to reside in the property and make use of the contents free of rent provided that they:

•                     Pay all rates, taxes, insurance premiums and other outgoings on the property; and

•                     Maintain the property in a reasonable state of repair having regard to its condition at the time of passing of the deceased.

Additionally, under clause X(x) to (x), the property and contents were to form part of the residue of the deceased estate on the earliest of:

•                     The death of Person B;

•                     Person B giving notice to the trustee that they no longer wish to occupy the property;

•                     The trustees determining that Person B has ceased to reside permanently at the property; or

•                     The period of X year having passed from date the deceased passed.

Under subclause X, the deceased stated that they made greater provision for Person B in the distribution of their estate because of the specifical care and assistance Person B provided them in life.

Under clause X, Person B was also granted the option to purchase the property. Subclause X limited this option to be made in writing to the trustees within in X year from date of death.

On XX XXXX 20XX, the deceased passed.

At the time of the deceased passing, they lived with Person B.

A coronal inquest commenced at the time of the deceased's passing, to review the circumstances of the cause of death, after being referred to State Police on suspicion that the hospital may have been negligent in treating them in the last hours of their life. This prevented the release of the official death certificate.

At the time of passing, the deceased was not a foreign resident.

The property was the deceased's main residence at the time of their death and was not used to produce assessable income at this time.

On XX XXXX 20XX, Person B entered into a Deed of Agreement (the Deed) with Person A and Person C. Together forming the parties.

Person B claimed the deceased did not make adequate provision for their proper maintenance and support from the estate and has given notice of their intention to bring a Family Provision Application under section 41 of the Succession Act 1981 (State A).

Under the Deed, the parties agreed by way of provision for the proper maintenance and support of the Person B, the Will be read and construed as:

•                     Clause X(x) be amended such that the period of X calendar year be extended to X year and X months.

•                     Clause X be deleted and replaced.

•                     Person B agrees to renounce their role as an executor of the estate and agrees to sign a Renunciation of Probate within X days of their solicitor being provided with a fully signed copy of the Deed.

•                     The Executor agrees no further action or enquiries will be made relating to the application and/or use of the deceased's funds prior to their death.

On XX XXXX 20XX, Person C had a work accident and required surgery.

On XX XXXX 20XX, Person B renounced all right and title to the probate and execution of the Will and estate of the deceased.

In XXXX 20XX, Person B underwent surgery for a full XXXX.

In XXXX 20XX, Person B underwent XXXX surgery.

On XX XXXX 20XX, the coroner released preliminary report into the death of the deceased. Commenced progressing updating and release of official death certificate.

On XX XXXX 20XX, Person B gave notice to the executors that they would be moving out of the property.

On XX XXXX 20XX, Person B moved out of the property.

From XX XXXX 20XX until it was sold, the property remained vacant.

On XX XXXX 20XX, you received the official death certificate.

You applied for Probate.

On XX XXXX 20XX, you received a private offer to sell the property.

On XX XXXX 20XX, you entered a contract to sell the property.

On XX XXXX 20XX, settlement occurred. (This was only just outside the two year period.)

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195