Private ruling: Main residence - deceased estate - Commissioner discretion
Date of advice: 24 April 2026
Published: 13 July 2026

Ruling: Q1: Will the extended period by which the ownership interest of the Estate in the Property may end be X November 2025? | A1: Yes | Q2: Will any capital gain or loss made by the Estate in relation to the disposal of the dwelling be disregarded under section 118-195 of the ITAA 1997? Answer Yes This private ruling applies for the following period: Income year ending 30 June 2026

Relevant facts and circumstances: Mr A acquired the Property in 1991. The Property was Mr A's main residence just before his death and was not then being used for the purpose of producing assessable income. Mr A passed away in 2014. He was not an 'excluded foreign resident' as per the definition of that term under subsection 118-110(4) of the ITAA 1997 just before his death. Pursuant to clause 5 of Mr A's Will: • he gave the Property to his wife Mrs A for her life or until she relinquished her interest in the Property; • during the continuation of Mrs A's interest in the Property, the trustee of the Estate was responsible for paying all expenses, repairs and maintenance in relation to the upkeep of the Property; and • on the occurrence of an event terminating Mrs A's interest in the Property, the Property was to form part of Mr A's residuary estate. The Property was Mrs A's main residence until her death in 2025. The Property formed part of Mr A's residuary estate upon Mrs A's death (in accordance with clause 5 of the Will). The Property was listed for sale in 2025. In their capacity as trustees for the Estate, Mr A's daughter and son entered into a contract for the sale of the Property in 2025. Settlement of the contract occurred on X November 2025.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 subsection 118-110(4) | Income Tax Assessment Act 1997 subsection 118-130(3) | Income Tax Assessment Act 1997 section 118-195 | Income Tax Assessment Act 1997 subsection 118-195(1) | Income Tax Assessment Act 1997 subsection 118-195(2)

Reasons for decision: Summary: All subsequent legislative references are to the ITAA 1997. The Commissioner exercises the discretion under table item 1 of subsection 118-195(1) to extend the time limit by which the Estate's interest in the Property ended until X November 2025. As a consequence, any capital gain or loss made by the Estate in relation to the disposal of the Property is disregarded under section 118-195. | Detailed Reasoning - Detailed reasoning: Section 118-195 disregards any capital gain or capital loss made from a CGT event that happens in relation to a dwelling, or the taxpayer's ownership interest in it, where the following conditions are satisfied: o from the time of the deceased's death until the taxpayer's ownership interest ends, the dwelling was used in one of the ways listed in column 3 of table item 2 of subsection 118-195(1) meaning it was the main residence of one or more of: - the spouse of the deceased immediately before the death; or - an individual who had a right to occupy the dwelling under the deceased's Will; or - the individual to whom the ownership interest passed as a beneficiary; Practical Compliance Guideline PCG 2019/5 explains how the CGT main residence exemption may apply to the disposal of a dwelling by a beneficiary or a trustee of a deceased estate and the factors which the Commissioner gives regard to in considering whether or not to grant an extension of time. Paragraph 3 of PCG 2019/5 states: Generally, [the Commissioner] will allow a longer period where the dwelling could not be sold and settled within 2 years of the deceased's death due to reasons beyond your control that existed for a significant portion of the first 2 years. Paragraph 12 of PCG 2019/5 sets out the circumstances favouring a longer period by which the taxpayer's ownership interest in the dwelling ends. They are: • the ownership of the dwelling, or the will, is challenged • a life tenancy or other equitable interest given in the will delays the disposal of the dwelling • the complexity of the deceased estate delays the completion of administration of the estate • settlement of the contract of sale of the dwelling is delayed or falls through for reasons outside of your control, or • restrictions on real estate activities imposed by a government authority in response to the COVID-19 pandemic. The Commissioner may also consider other factors relevant to the exercise of the discretion, as listed in paragraph 17 of PCG 2019/5 to include: • the sensitivity of your personal circumstances and of other surviving relatives of the deceased • the degree of difficulty in locating all beneficiaries required to prove the will • any period the dwelling was used to produce assessable income, and • the length of time you held the ownership interest in the dwelling. Conversely, paragraph 13 of PCG 2019/5 sets out the circumstances that the Commissioner considers cannot be material to the delays in the disposal of the taxpayer's ownership interest. They are: • waiting for the property market to pick up before selling the dwelling • waiting for refurbishment of the dwelling to improve the sale price • inconvenience on the part of the trustee or beneficiary to organise the sale of the dwelling, or • unexplained periods of inactivity by the executor in attending to the administration of the estate. For a dwelling that you have a contract for the happening of a CGT event, you have an ownership interest in it until your legal ownership of it ends (subsection 118-130(3)). Therefore, the interest owned by the Estate in the Property ended on X November 2025. The ownership interest of the Estate did not end within 2 years of the death of Mr A (in 2014), thereby exceeding the statutory limit in column 3 of table item 1 of subsection 118-195(1), and the Property was not used in one of the ways listed in column 3 of table item 2 of subsection 118-195(1) from the time of Mr A's death until X November 2025. Consequently, section 118-195 does not apply in respect of any capital gain or capital loss the Estate made from the sale of the Property, unless the Commissioner extends the time limit. The Commissioner considers it appropriate to exercise the discretion under table item 1 of subsection 118-195(1) to extend the time limit by which the interest in the Property owned by the Estate ended until the time at which that ownership interest ended, i.e. X November 2025. The basis for this decision is largely attributed to the fact that the delay in the selling of the Property was due to the life tenancy granted to Mrs A in Mr A's Will, a circumstance beyond the Estate's control. The basis for the decision to exercise the discretion under subsection 118-195(1) also includes the following: CGT event A1 under section 104-10 (being one of the events listed in subsection 118-195(2)) happened to the trustees of the Estate in relation to the Property upon entry into the contract of sale for the Property. The capital gain or capital loss made by the Estate from that CGT event may be disregarded under section 118-195 as:

Question 1: Will the Commissioner exercise the discretion under subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the 2-year time period by which the dwelling at the Property owned by the trustee for the Estate of Mr A (the Estate) ends? | the taxpayer is an individual to whom the ownership interest is passed as a beneficiary in a deceased estate, or the taxpayer owns the interest as a trustee of a deceased estate; | the ownership interest was acquired by the deceased before 20 September 1985; or | the ownership interest was acquired by the deceased on or after 20 September 1985 and the dwelling was the deceased's main residence just before their death and was not then being used for income producing purposes; | the taxpayer's ownership interest ends within 2 years of the deceased's death, or within a longer period allowed by the Commissioner; or | the deceased was not an excluded foreign resident just before their death; and | the capital gain or capital loss made by the taxpayer arose from a CGT event listed in | the trustees for the Estate entered into a contract for the sale of the Property within 7 months of the life tenancy having ended, and settled the contract within 10 months of the life tenancy having ended; | the Property was not used to derive assessable income during the relevant period; and | none of the factors in paragraph 13 of PCG 2019/5 were relevant to the delay in disposing of the Property. | the Estate's ownership interest in the Property was owned as a trustee of a deceased estate; | the ownership interest was acquired by Mr A after 20 September 1985 and the dwelling was his main residence just before his death and was not then being used for income producing purposes; | the Estate's ownership interest ended within a longer period allowed by the Commissioner (as confirmed in response to questions 1 and 2 of this ruling); and | Mr A was not an excluded foreign resident just before his death.