Private ruling: Commissioner's discretion - deceased estate
Date of advice: 23 February 2026
Published: 20 April 2026
Ruling period: Year ended 30 June 20YY | Year ending 30 June 20YY
Date scheme commenced: DD MM 20YY

Ruling: Q1: Will the Commissioner exercise the discretion under section 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997) to allow an extension of time for you to dispose of your ownership interest in the dwelling (subject to the 2-hectare limitation) and disregard the capital gain or capital 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 ato.gov.au for 'QC 66057'. | Q2: Are you entitled to apply 15-year exemption to disregard the capital gain made on the disposal of the property? | A2: Yes.

Relevant facts and circumstances: On DD MM 20YY, the deceased acquired a property located at XXX XXX (the property) for $XXX. The total land area is XX Hectares, with an existing dwelling being used as the deceased's main residence. The deceased carried on a business as a sole trader, from the property since they moved in until they passed away. On DD MM 20YY, the deceased passed away. The deceased net assets, and those of any connected entities and affiliates, were less than $X million just prior to their death. The deceased was registered for GST between DD MM 20YY and DD MM 20YY, six months after their passing and on which date the ABN was cancelled. The property was the deceased's main residence just before their passing. The deceased did not use the home or the property to derive rental income. On DD MM 20YY, Probate was granted to the deceased child. You have supplied the deceased's will. On DD MM 20YY, the deceased's child listed the property for sale. Mid-20YY, due to unsatisfactory responses, the deceased child re-listed the property with another real estate agent. On DD MM 20YY, a sale contract was signed, which was subject to the successful settlement of the buyers' sale of their own property. On DD MM 20YY, after delays caused by the buyers' property sale falling through the buyers were allowed to move into the property. A lease agreement was signed to charge the buyers a weekly rent of $XX from DD MM 20YY until the settlement. On DD MM 20YY, the property settled.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-195 | Income Tax Assessment Act 1997 section 152-80 | Income Tax Assessment Act 1997 subsection 152-80(1) | Income Tax Assessment Act 1997 section 152-105 | Income Tax Assessment Act 1997 paragraph 152-105(d)

Reasons for decision: Summary: Subsection 152-80(1) of the Income Tax Assessment Act 1997 (ITAA 1997) applies if in certain circumstances, including where: • a CGT asset forms part of the estate of a deceased individual • the asset devolves to the individual's legal personal representative • the deceased individual would have been entitled to reduce or disregard a capital gain under Division 152 of the ITAA 1997 if a CGT event had happened in relation to the CGT asset immediately before their death and • a CGT event happens in relation to the CGT asset within 2 years of the individuals death. Where the above is satisfied, the legal personal representative is entitled to reduce or disregard a capital gain in the same way the deceased individual would have been entitled to as if: • paragraph 152-105(d) only required the deceased individual to have been 55 or over, or permanently incapacitated, at the time of the CGT event referred to in paragraph (1)(c) of this section; and • paragraph 152-305(1)(b) did not apply Basic conditions To be eligible for any of the CGT concessions, you must first meet the basic eligibility conditions. • a CGT event happens in relation to a CGT asset of yours in an income year; • the event would (apart from Division 152 of the ITAA 1997) have resulted in the gain; • at least one of the following applies: - you are a small business entity for the income year; - you satisfy the maximum net asset value test - you are a partner in a partnership that is a small business entity for the income year and the CGT asset is an interest in an asset of the partnership; - the conditions mention in subsections (1A) or (1B) are satisfied in relation to the CGT asset is an interest in an asset of the partnership (a) the CGT asset satisfies the active asset test All the concessions, except for the small business 50% active asset reduction, have additional requirements you must meet. Active asset test An asset passes the active asset test if it has been an active asset of yours for at least: • 7.5 years during the test period (if you've owned it for more than 15 years) • half of the test period (if you've owned it for 15 years or less). The test period begins when you acquired the asset and ends at whichever occurs first: • the capital gains tax (CGT) event relating to the asset • the business ceases or is sold, if the CGT event occurred 12 months or less after this. 15-year exemption Under section 152-105 of the ITAA 1997 if you are an individual, you can choose to disregard all or part of a capital gain if: • the basic conditions are satisfied • you continuously owned the CGT asset for the 15-year period ending just before the CGT event and • you are 55 or over at the time of the CGT event and the event happens in connection with your retirement However, there is no requirement for the event to be in connection with retirement where the individual has passed and the legal personal representative is accessing the concession via section 152-80 of the ITAA 1997. | Detailed Reasoning - Application to your circumstances: In this case, the deceased would have satisfied the relevant conditions for the 15-year exemption just prior to their death because: • if the asset was sold before they passed it would have resulted in a capital gain • the deceased satisfied the maximum net asset value test just prior to their death • the property satisfied the active asset test as it was used in the course of carrying on a business for more than 7.5 years during the ownership period • the deceased continuously owned the CGT asset for the 15-year period just prior to their death and • the deceased was over 55 years of age. The deceased passed away on DD MM 20YY and a contract to sell the property was executed on DD MM 20YY. A CGT event has occurred within 2 years of the deceased's date of death. Therefore, under section 152-80 of the ITAA 1997 the estate is entitled to apply the 15-year exemption to disregard any capital gain made from the disposal of the property. | Detailed Reasoning - Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-195 Income Tax Assessment Act 1997 section 152-80 Income Tax Assessment Act 1997 subsection 152-80(1) Income Tax Assessment Act 1997 section 152-105 Income Tax Assessment Act 1997 paragraph 152-105(d)