Private ruling: Commissioner's discretion - deceased estate
Date of advice: 14 February 2022
Published: May 2022
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner allow an extension of time for you to dispose of your ownership interest in the dwelling and disregard the capital gain or loss you made on the disposal? | A1: 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 'QC 66057' on ato.gov.au.

Relevant facts and circumstances: The deceased passed away on XX/XX/20XX. The deceased and their spouse purchased the dwelling as joint tenants after 20 September 1985. The deceased's spouse passed away on XX/XX/20XX and their X% share in the dwelling transferred by way of survivorship to the deceased. The dwelling was the main residence of the deceased and not being used to produce assessable income. The land adjacent to the dwelling was less than 2 hectares in area. The deceased's Will named their X children as beneficiaries. Probate was granted on XX/XX/20XX to X of the deceased's children as the executors named in the Will. The dwelling was transmitted to the executors on XX/XX/20XX. The executors signed an agency agreement with a real estate agent on XX/XX/20XX where the agent estimated the selling price for the dwelling. On XX/XX/20XX the real estate agent advised there was little interest in the dwelling and there were competing properties for sale within the same area. On XX/XX/20XX the real estate agent revised in writing their estimate of the selling price. The real estate agent advised on XX/XX/20XX they had an interested buyer indicating they would be willing to offer $X but were not in a position to do this for X months, however the agent advised the buyer that an offer this low would not be considered. In mid-Month 20XX an offer was made on the dwelling which was rejected on XX/XX/20XX by the real estate agent and a further offer was received however the agent again advised the buyer this was still too low. In late Month 20XX the real estate agent received an offer which was not negotiated further as they suspected this was not a genuine buyer. An offer to purchase the dwelling was received on XX/XX/20XX and accepted by the executors. After conducting a building and pest inspection, the buyer revised their offer on XX/XX/20XX which was then rejected by one of the executors. On XX/XX/20XX, X of the beneficiaries, including one of the executors arranged for a building and pest inspection which disclosed there were no live termites in the dwelling. An opinion of the value of the dwelling was obtained from another real estate agent on XX/XX/20XX who confirmed the dwelling was significantly undervalued. In Month 20XX the executors attended mediation where it was agreed that the engaged real estate agent would be terminated as the selling agent. An offer was made on the dwelling to the executors on XX/XX/20XX. On XX/XX/20XX the real estate agent advised that a pest inspector reported there were live termites in the living areas of the dwelling which resulted in the buyer not proceeding with their offer. After the required 30 days' notice was given, the real estate agent was terminated on XX/XX/20XX and at this point no new selling agent was appointed. A dispute arose between the executors regarding an appropriate sale price for the dwelling and how to best manage the termite situation which resulted in the dwelling being removed from sale. In early Month 20XX, X of the X beneficiaries obtained a further pest inspection which indicated the presence of live termites in the dwelling. On XX/XX/20XX the X beneficiaries arranged for the dwelling to be sprayed and have a bait system installed for termites. No improvements or renovations were made to the dwelling other than the listed termite treatments. On XX/XX/20XX, Supreme Court proceedings commenced for the appointment of an independent administrator with one of the executors applying to remove themself and their sibling as executors. On XX/XX/20XX the Supreme Court appointed an independent administrator, but this was not fully effectuated until XX/XX/20XX when a grant of letters of administration were made. The dwelling was listed for sale through a real estate agent as soon as practically possible by the independent administrator on XX/XX/20XX. The sale was actively managed via public auction on XX/XX/20XX where the dwelling was sold. Settlement on the sale of the dwelling occurred on XX/XX/20XX.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 118-195(1)