Before the Aged Care Stage: Important Advice if Your Elderly Parent is Losing Capacity

You are currently viewing Before the Aged Care Stage: Important Advice if Your Elderly Parent is Losing Capacity

Important advice about TFNs, Aged Care and losing capacity – from advisors who have seen it all.

Consider these circumstances...

You have an elderly parent. They have been retired for years or may have worked as a stay at home parent. They may not have lodged tax returns for decades. They may have dementia. Their paperwork may be a mess or may be missing entirely.

It’s now time for your parent to enter into an aged care facility. You will need to sell the family home to pay for this. You have an Enduring Power of Attorney, so seemingly everything should be straightforward.

TFNs and other little details…

Selling your own home is stressful enough. But selling someone else’s home can be far more complicated.

One of those complicating factors might be obtaining a capital gains withholding clearance certificate from the ATO. This certificate helps the ATO to identify whether any withholding is required from the sale of Australian property. It is needed for properties with a purchase price of more than $750,000. Obviously, a considerable number of homes in Australia would meet this condition.

To apply for a clearance certificate, an individual applicant needs to provide some basic personal information. One such piece of information is their Tax File Number.

And therein lies the issue. Your parent’s TFN will be needed for the clearance certificate, and potentially also for other reasons such as dealing with the agent or bank regarding the sale proceeds.

For your parent with disorganised or missing paperwork, you may simply not know or be unable to find their TFN. In this case, you will need to apply to the ATO to obtain the TFN using your Power of Attorney. As part of this process, you will need to provide the ATO with a certified copy of the Power of Attorney.

It may take the ATO several weeks to process the application and grant access to your parent’s TFN. But this piece of information is needed for the clearance certificate, and the clearance certificate needs to be provided to the purchaser on or before the day of settlement. Therefore, obtaining a clearance certificate can become a roadblock. A process that would ordinarily be one-step and require several days when selling your own home can, in the case of your parent’s home, instead become a two-step process needing several weeks.

In short, if you haven’t obtained your parent’s TFN well in advance, there’s a good chance that this will affect or delay the sale of the property. Aside the administrative headaches, it might even result in the sale collapsing. It might therefore be a good idea to look into this sooner rather than later.

Aintree Group Legal will be happy to discuss all of your estate planning and property needs. Contact us today.