Private ruling: Deceased estate
Date of advice: 6 February 2026
Published: 30 March 2026
Ruling period: Year ended 30 June 20YY | Year ended 30 June 20YY | 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 Income Tax Assessment Act 1997 (ITAA 1997) to allow an extension of time for you to dispose of your ownership interest in the dwelling and disregard the capital gain or capital loss you made on the disposal of the dwelling and up to 2 hectares of adjacent land? | A1: Yes. Having considered your circumstances and the relevant factors the Commissioner will allow an extension of time to DD MM 20YY, which was the date that your ownership interest in it ended. However, the extension only extends to the dwelling and the land to the extent that the land was used primarily for private and domestic purposes in association with the dwelling, up to a maximum area of 2 hectares. As such, you can apply the main residence exemption to whichever area of land you choose in addition to the land on which your dwelling is situated, however, subsection 118-120(3) of the ITAA 1997 specifies that the total of the land (including the land on which the dwelling is situated) must not exceed 2 hectares. | Q2: Will the Commissioner exercise the discretion under subsection 152-80(3) of the ITAA 1997 to extend the 2-year time period to DD MM 20YY? | A2: Yes. Having considered your circumstances, including the reasons for the delay, it is reasonable to allow an extension of the time limit under subsection 152-80(3) of the ITAA 1997 until DD MM 20YY.

Relevant facts and circumstances: The deceased passed away on DD MM 20YY. The deceased acquired an initial ownership interest in the property from a relative after 20 September 1985. On DD MM 20YY, the deceased acquired the remaining ownership interest in the property by sale from another relative. Between MM 20YY and MM 20YY, the deceased constructed a dwelling on the property. The property was situated on more than 2 hectares of land. The dwelling and the 2 adjacent hectares were the main residence of the deceased just before they passed away and were not used to produce assessable income at that time. The remaining area of the property was used for farming purposes from the time that it was acquired. The deceased owned other properties at the time of death which were also acquired after 20 September 1985 (Property B and Property C). Property B adjoins the property and is more than 2 hectares in size and was used for farming purposes in conjunction with the property. On DD MM 20YY, probate was granted to the executors. The deceased was survived by the following family members: Person A, Person B, Person C and Person D. The deceased's will, dated DD MM 20YY, provided that the property was to go solely to Person D, Property B was to go solely to Person B and Property C was to go solely to Person C. Following the deceased's death, a dispute arose amongst the immediate family members regarding how the estate assets including how the properties should be administered. On DD MM 20YY, Person A commenced a Testator's Family Maintenance (TFM) claim in the Supreme Court of State A under Part IV of the Administration and Probate Act 1958 (State A). Person A's claim related to a transfer of the property. As the property was not held by the executors, they needed the approval of Person D and Person A to sell and the TFM claim needed to be resolved before the property could be sold. On DD MM 20YY, Person A filed and served an affidavit in support of their TFM claim. On DD MM 20YY, a First Directions Hearing was held for Person A's TFM claim. The court ordered that mediation occur. On DD MM 20YY, mediation of Person A 's TFM claim failed. On DD MM 20YY, Person C commenced a TFM claim in the Supreme Court of State A under Part IV of the Administration and Probate Act 1958 (State A). On DD MM 20YY, Person A and Person C's TFM claims were consolidated, and Person B and Person D joined as defendants to the consolidated proceeding. On DD MM 20YY, Person C filed an affidavit in support of their TFM claim. On DD MM 20YY, Person B commenced a proceeding in the Supreme Court of State A claiming that they were the legal and beneficial owner of the property. On DD MM 20YY, Person C filed an affidavit in support of their TFM claim. On DD MM 20YY, Person B filed an amended statement of claim. On DD MM 20YY, the executors filed a defence to Person B's claim. On DD MM 20YY, Person B filed a defence to their claim. On DD MM 20YY, mediation occurred, and a conditional settlement was entered. On DD MM 20YY, Person D exercised their right to withdraw from settlement and the proceedings remained unresolved. Following the deceased's death, the property was still being used for farm work, which was undertaken by Person B. In MM 20YY, fencing was constructed between the property and Property B and farming work ceased. On DD MM 20YY, all proceedings were settled on a consolidated basis by agreement of all the parties, and a Terms of Settlement Deed was executed. On DD MM 20YY, the property was listed for sale. DD MM 20YY, an auction was held, however the property was not sold. A contract was entered to sell the property on DD MM 20YY with settlement occurring on DD MM 20YY.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-195 | Income Tax Assessment Act 1997 section 118-120(3) | Income Tax Assessment Act 1997 section 152-80 | Income Tax Assessment Act 1997 paragraph 152-80(1)(d) | Income Tax Assessment Act 1997 subsection 152-80(3)