Private ruling: Deceased estate 2-year discretion
Date of advice: 28 January 2026
Published: 30 March 2026
Ruling period: Year ended 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Will the Commissioner exercise the discretion under section 118-195 of Income Tax Assessment Act 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? | 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'.

Relevant facts and circumstances: The deceased passed away on DD MM 20YY. The deceased acquired the property before 20 September 1985. The deceased had several children: Person A, Person B, Person C, Person D and Person E. The deceased's will, dated DD MM 20YY, provided Person A and Person B were to be the executors of their estate. The deceased's will also provided that the residuary of their estate was to be distributed to all their children in equal shares. The property was the main residence of the deceased just before they passed away and was not used to produce assessable income at that time. The property was situated on less than two hectares of land. Person A and Person B had experienced severe conflict since before the deceased passed away. They could not agree on how the estate should be administered and both sought their own probate application to administer the deceased's estate. On DD MM 20YY, probate was granted to Person A. On DD MM 20YY, probate was granted to Person B. On DD MM 20YY, Person E lodged a Part IV claim as they believed that they were entitled to a portion of the estate. Between MM 20YY and MM 20YY, Person E's lawyers contacted Person A and Person B several times concerning the Part IV claim to explain why Person E was eligible to make the claim and to attempt to resolve the matter without legal proceedings. Person A's lawyers approached Organisation A to take over administrating the estate. On DD MM 20YY, Organisation A confirmed that they would commence administering the estate, if Person A and Person B's grants of probate were revoked and they could be appointed as an independent administrator. On DD MM 20YY, Person A's lawyers advised Organisation A that there had not been any progression in administering the estate due to the ongoing conflict. Person C sought legal representation to seek advice to remove the executors and appoint Organisation A as executor. On DD MM 20YY, Person C's lawyers to seek an order to have the executors removed and Organisation A appointed as executor. The hearing was scheduled to occur in the Supreme Court of State A on DD MM 20YY. The court proceedings were adjourned until DD MM 20YY. On DD MM 20YY, Organisation A was appointed executor of the estate and commenced the administration process. Following this, Organisation A requested documents from the beneficiaries' lawyers, updated them on the progress of the estate and of their intention to sell the property. Organisation A also reviewed the Part IV claim lodged by Person E. As Person D resided in the property, Organisation A requested that Person D contact them so that an inspection of the property could be arranged. Organisation A also advised Person D that they had a period to vacate the property for it to be prepared for sale and advised that if they remained in the property, Organisation A would request rental rates at market value. On DD MM 20YY, Organisation A spoke with Person B's lawyers, who advised information about funds held. Person B's lawyers also advised Organisation A that Person B intended to make a Part IV claim and that Person D was also considering making a Part IV claim. Organisation A proceeded to seek legal advice on this. On DD MM 20YY, Person D advised Organisation A that they did not wish to vacate the property and mentioned relevant reasons. Organisation A were unaware of the relevant reasons. On DD MM 20YY, Organisation A engaged their contractors to perform an inspection of the property. Organisation A also engaged a valuer to value the deceased's personal effects. On DD MM 20YY, the property inspection was completed. On DD MM 20YY, Organisation A arranged for a title search on the property. Organisation A also arranged for the property to be transferred into Organisation A's name in their capacity as executor of the estate. On DD MM 20YY, Person B's Lawyers emailed Organisation A to formally advise that they were representing Person B and Person D and that they both intended to contest the deceased's Will. As the property could not be disposed of until the Part IV claims had been finalised and the animals were re‐homed, Organisation A permitted Person D to continue to reside in the property. On DD MM 20YY, Organisation A advised their internal legal department of Person B and Person D's Part IV claims. The following day, Organisation A's legal area emailed all legal representatives of the beneficiaries to propose a conference to explore options for resolving the Part IV claims. On DD MM 20YY, Organisation A suggested a prelitigation mediation to all parties in another attempt to resolve the issues before undertaking a formal mediation process. Neither this nor the conference suggested by Organisation A on DD MM 20YY occurred. On DD MM 20YY, Organisation A wrote to Person B's lawyers to inform them of Organisation A's intent to obtain a valuation for the property. Organisation A engaged valuers to attend to the property for a valuation shortly after. On DD MM 20YY, the valuation report for the property was completed. Between MM 20YY and MM 20YY, Organisation A attempted to obtain information from all legal representatives of the beneficiaries, including from Person B directly to obtain information about funds held for the estate. On DD MM 20YY, after some actions regarding the funds held, Organisation A then commenced their process of preparing a financial statement for legal purposes. On DD MM 20YY, the financial statement prepared by Organisation A was completed and was provided to Organisation A. On DD MM 20YY, Organisation A performed a search to ensure that the deceased only had the children that were known. On DD MM 20YY, Organisation A received a letter from Person B's lawyers that advised that a document had been lodged with the Supreme Court of State A on behalf of Person B and Person D for their Part IV claims. Between MM 20YY and MM 20YY, Organisation A's legal area focused on addressing all Part IV claims. On DD MM 20YY, mediation was set between all parties. At this mediation, none of the Part IV claims were settled. An agreement was reached between the beneficiaries to progress the administration of the estate. It was also agreed that Person D would vacate the property by DD MM 20YY so that the property could be sold. On DD MM 20YY, Person D vacated the property and Organisation A took possession. On DD MM 20YY, Organisation A engaged their contractors to clean the property and organised for the locks to be changed on all doors. On DD MM 20YY. The property had been cleaned, and the locks had been changed. Organisation A then engaged their internal property team to commence the sales process. A sales agent was engaged to market the property, and an auction date of DD MM 20YY was also set. On DD MM 20YY, the property was sold at auction with settlement occurring on DD MM 20YY.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-195