Private ruling: Commissioner's discretion - deceased estate
Date of advice: 27 July 2022
Published: November 2022
Ruling period: Year ended 30 June 2021
Date scheme commenced: 1 July 2020

Ruling: Q1: Will the Commissioner exercise the discretion to 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.

Relevant facts and circumstances: At some time prior to 20 September 1985, the deceased and their spouse purchased the property. The property size is less than two hectares. It was the main residence of the deceased and was not used to produce income at any time. About 8 years before the deceased death, the deceased's spouse passed away, and the deceased became the sole owner of the property. The deceased passed away during the 2019 financial year. The solicitors took several months to attend to the necessary paperwork for the application of Probate. Probate was issued approximately 6 months after the deceased's death. The solicitors advised Executor 1 and Executor 2 that the assets of the Estate could not be dealt with or removed from the property until Probate was granted. The dwelling was heavily congested with personal possessions and other furniture/items which had been accumulated over many decades of occupation. The deceased's spouse had filled the garage including timber and assorted materials stored in the roof cavity. The deceased had an aversion to disposing of broken and unwanted items and had kept boxes of old paperwork. It took considerable time and effort to sort through all the items and categorize them as either junk, items for charity or items for keepsake. A further complication was that Executor 1 and one of the deceased children lived 1.5 - 3 hours away and both worked and had families of their own to look after. Furthermore Executor 2 had to be involved in all decision making and was not always available in a timely fashion. Progress ceased at the property for several months when the covid-19 pandemic began. This was due to the public health lockdowns including general, state, regional and localised lockdowns. Approximately 1 year and 10 months after the deceased's death, the final pile of furniture and materials were removed from the property and immediately a real estate agent was engaged. The property was placed on the market and the first open home was held within the same month. A contract for sale was signed 9 days prior to the expiration of the 2 year period. The purchasers requested an extension of time to settle due to personal circumstances. The property settled approximately seven weeks after the expiration of the 2 year period.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-195