A family dispute led to a 50 000 tax bill until Equity Trustees talked to the ATO
The family home is often the centre of wealth. It was no different for Barbara*, who left her home to her four children.
The only problem was one of her children, who had lived in the house her entire life, refused to move after Barbara died.
“In order for the other three to get any sort of inheritance, the daughter had to move out so that the property could be sold,” Equity Trustees Regional Manager West – Estate Management, Kerrylea Harper, says. “And then once it’s sold, the proceeds can come into the estate.”
It was a long process during which Equity Trustees attempted to find the daughter another place to live. The clock was ticking. An inherited property is generally exempt from CGT only if it is sold within two years of the deceased's death.
By the time she eventually left Barbara’s house, the time limit had passed, and the estate was hit with a $50,000 CGT bill.
While many people would have paid the bill from the proceeds of the house sale, Equity Trustees believed there were strong grounds for the Australian Taxation office (ATO) to make an exemption given the difficulty in removing the resident.
“We thought that we would have good merit for a private ruling because of the litigation and the delays, which were outside of our control,” she says. “But it's a significant application. We had to go through seven years of emails, letters, phone records, notes – everything to prove what happened.”
The process took approximately nine months. The ATO then came back with six questions after reviewing the application. Equity Trustees once again reviewed the estate records to provide more evidence in response.
The application was ultimately successful and saved the estate a hefty tax bill.
Kerrylea says her particular area of the business has applied to the ATO for a private ruling no more than four times in the past eight years.
“Whilst we don't do the ATO private ruling very often we know it's there. We knew we had an opportunity, and we knew we could substantiate it, which is why we were able to follow through and save our clients’ tax.”
* Name changed to protect privacy.
The only problem was one of her children, who had lived in the house her entire life, refused to move after Barbara died.
“In order for the other three to get any sort of inheritance, the daughter had to move out so that the property could be sold,” Equity Trustees Regional Manager West – Estate Management, Kerrylea Harper, says. “And then once it’s sold, the proceeds can come into the estate.”
It was a long process during which Equity Trustees attempted to find the daughter another place to live. The clock was ticking. An inherited property is generally exempt from CGT only if it is sold within two years of the deceased's death.
By the time she eventually left Barbara’s house, the time limit had passed, and the estate was hit with a $50,000 CGT bill.
While many people would have paid the bill from the proceeds of the house sale, Equity Trustees believed there were strong grounds for the Australian Taxation office (ATO) to make an exemption given the difficulty in removing the resident.
“We thought that we would have good merit for a private ruling because of the litigation and the delays, which were outside of our control,” she says. “But it's a significant application. We had to go through seven years of emails, letters, phone records, notes – everything to prove what happened.”
The process took approximately nine months. The ATO then came back with six questions after reviewing the application. Equity Trustees once again reviewed the estate records to provide more evidence in response.
The application was ultimately successful and saved the estate a hefty tax bill.
Kerrylea says her particular area of the business has applied to the ATO for a private ruling no more than four times in the past eight years.
“Whilst we don't do the ATO private ruling very often we know it's there. We knew we had an opportunity, and we knew we could substantiate it, which is why we were able to follow through and save our clients’ tax.”
* Name changed to protect privacy.
Last updated: 10 February 2025