Private ruling: Commissioner's discretion - deceased estates
Date of advice: 17 March 2026
Published: 11 May 2026
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX
Date scheme commenced: DD MM YYYY

Ruling: Q1: Is the estate entitled to the 50% small business reduction under Subdivision 152-C of the Income Tax Assessment Act 1997 (ITAA 1997) on the sale of the four properties? | A1: Yes. Having considered your circumstances and the relevant factors, you are entitled to the 50% small business asset reduction under Subdivision 152-C of the ITAA 1997 on the sale of xx properties. | Q2: Will the Commissioner exercise his discretion stipulated in subsection 152-80(3) of the ITAA 1997 to allow an extension to the two-year time limit for the active asset test for properties 1, 2 and 4? | A2: Yes. In this case, there were delays preventing the properties from being sold. The Commissioner has considered your facts and circumstances and will exercise the discretion under subsection 152-80(3) of the ITAA 1997 and extend the period for the Trust to dispose of the properties. | Q3: Will the Commissioner exercise the discretion under section 118-195 of the ITAA 1997 to allow an extension of time for you to dispose of your ownership interest in the dwelling (Property 3) and disregard any capital gain or capital loss you make on the disposal? | A3: Yes. Having considered your circumstances and the relevant factors, the Commissioner will exercise the discretion under section 118-195 to allow a longer period for you to dispose of your ownership interest in the dwelling and disregard the capital gain or capital loss you made on that disposal (limited to the dwelling and adjacent land up to 2 hectares). Further information about the Commissioner's discretion can be found by searching ato.gov.au for 'QC 66057'.

Relevant facts and circumstances: Estate background You act as administrator and trustee of the estate of Person 1 (the deceased). During the 20XX income year, the deceased passed away interstate. The deceased was not permanently incapacitated just before their death. The deceased was a xx farmer (recorded as the usual occupation on their death certificate). The income and expenses of the xx farm had been disclosed and reported in the deceased's individual income tax returns. The deceased had employed two employees to manage the farming properties. After the deceased's death, the same employees continued working at the farming properties until the properties were sold under the estate administration. The income and expenses of the xx farm had been disclosed and reported in the relevant estate income tax returns. The deceased operated a xx farm business (including manufacturing xx produce and maintaining animals for the purpose of selling them) prior to their death. The xx farm business continued into the estate whilst the estate was being administered. The aggregated turnover of the xx farm has always been less than $2 million. The net asset value of the business is less than $6 million in the 20XX-XX and 20XX-XX income years. The deceased was predeceased by their spouse, Person 2, who died on DD MM 20XX. Person 2 was also a xx farmer. The deceased did not re-partner after Person 2's death. Person 2 and the deceased did not have any children together. The deceased was survived by their parent, Person 3. As the deceased passed away interstate, under the laws of intestacy, Person 3 is identified as the sole beneficiary of the deceased's estate. Person 3 authorised you to apply for Letters of Administration so you could administer the estate. On DD MM 20XX, the Supreme Court granted Letters of Administration and appointed you as administrator and trustee of the estate. Table 1: Table of name and relationship to the deceased: Name Relationship to the deceased Occupation Date of death (Name removed) parent-in-law 1 xx Farmer DD MM YYYY (Name removed) Parent-in-law 2 xx Farmer DD MM YYYY Person 2 Spouse xx Farmer DD MM YYYY The deceased N/A xx Farmer DD MM YYYY (Name removed) Sibling-in-law 1 Unknown N/A (Name removed) Sibling-in-law 2 Unknown N/A (Name removed) Sibling-in-law3 Unknown N/A (Name removed) Parent Unknown N/A The Properties The deceased had ownership interests in xx farming properties: 1) Property 1 ("xx Farm") • The deceased acquired 100% ownership interest in this property on DD MM YYYY. • This property is where the main xx operations took place. • This property was also used as pasture for grazing. 2) Property 2 ("Land Adjoining the xx Farm") • The deceased acquired 50% ownership interest in this property on DD MM YYYY. • This property was used as pasture for grazing. • The land was also used for fodder production, including seeding, fertilising, baling, and silage. 3) Property 3 • The deceased held a 50% ownership interest in the dwelling located at this property, which they used as their main residence and did not use to produce assessable income. • This property is over 20 hectares in size. The total area of the property exceeded 2 hectares. • No capital works, renovations, or structural improvements were carried out on the dwelling during the deceased's ownership or during your administration of the estate. • This property was used as pasture for grazing. • This was where weaning of xx took place as well. This property also held storage of hay bales for fodder. 4) Property 4 (Vacant land opposite Property 3) • The deceased acquired 2/3 ownership interest in this property on DD MM YYYY. • This property was used as pasture for grazing. • The land was also used for fodder production, including seeding, fertilising, baling, and silage. Essentially all four properties were utilised for the overall xx farm production from breeding, birthing, raising of xx, grazing, fodder production, twice-daily xx production, and effluent management, as well as general farm maintenance required for xx production and cattle control (i.e. fencing). Causes of Delay Will Dispute and Probate Litigation On DD MM YYYY, you received a letter from Person 4 claiming that the deceased had left a will and that the family solicitor (Solicitor 1) held the will. On DD MM YYYY, you received a scanned copy of an alleged will dated DD MM YYYY naming Person 4 as executor, and you commenced enquiries into the Will's authenticity and status. From MM YYYY to MM YYYY, you sought further information and confirmation about the alleged Will and you did not progress the sale and distribution of estate assets (including Property 3) while the dispute remained unresolved. On DD MM YYYY, you instructed solicitors (Solicitor 2) to act for you in relation to the alleged Will dispute. On DD MM YYYY, you filed an application in the Supreme Court seeking judicial advice and determination regarding the administration of the estate given the unresolved Will dispute. On DD MM YYYY, the Supreme Court ordered you to proceed with administration and distribution of the estate on an intestacy basis, rejected the purported Will, and ordered Person 4 to pay your legal costs. Further Claims by Family Members On DD MM YYYY, Person 5 asserted claims against the estate, including a loan agreement and asserted equitable interests, and you paused steps to dispose of estate assets while you addressed those claims. On DD MM YYYY, you participated in mediation regarding Person 5's claims, and you continued negotiations after the mediation. On DD MM YYYY, all parties executed a Deed of Settlement, which resolved the dispute and set the process for dealing with the remaining estate assets, including the sale of Property 3. During this time, Entity 1 continued with steps to administer the estate, including the sale of xx, semen/embryos, and farm vehicles/stock trailers, as well as the preparation and lodgement of income tax returns. Entity 1 obtained valuation reports for the farming properties, which confirm that all four properties are designated farming zones. The existing uses for manufacturing xx produce and maintaining animals for the purpose of selling them are permitted under the current zoning and conform with the town planning guidelines. Covid-19 Lockdowns and Operational Hurdles Between MM YYYY and MM YYYY, Government COVID-19 lockdowns and travel restrictions limited access to the properties, including the Property 3, and delayed cleaning, preparation, inspections, and sale activities. Title and Property Issues Between MM YYYY and MM YYYY, you completed steps to resolve title issues affecting the Property 3, including replacement of a lost title, registration requirements (including transmission), and withdrawal of caveats, to enable sale with clear title. On DD MM YYYY, you resolved the Property 3 title issues with the state's titles office. Sale and Settlement The Deed of Settlement provided, inter alia, for the estate-owned properties to be dealt with as follows: • Transfer of the xx Farm to Person 5 • Sale of: - Vacant land adjoining the xx Farm - House and land at Property 3 - Vacant land opposite Property 3 Following this, Entity 1 commenced dealing with the Estate's farm equipment and effects held at two properties in readiness to complete the transfer one of the properties and sale of farm chattels to be auctioned on site at another property. On DD MM YYYY, Entity 1 engaged a real estate company (Entity 2) for the sale of vacant land adjoining the xx Farm. On DD MM YYYY, Entity 1 engaged Entity 2 for the auction sale of farm equipment. On DD MM YYYY, Entity 1 engaged Entity 2 for the sale of vacant land opposite Property 3. On DD MM YYYY, auction sale of the land adjoining the xx Farm and the vacant land opposite Property 3. Both properties were sold at auction, and contracts of sale were signed. On DD MM YYYY, settlement of the sale of the land adjoining the xx Farm took place. On DD MM YYYY, settlement of the sale of the vacant land opposite Property 3 took place. On DD MM YYYY, the transfer of the xx Farm to Person 5 was completed. On DD MM YYYY, you engaged Entity 2 to sell the Property 3. On DD MM YYYY, you sold Property 3 at auction and signed the contract of sale. On DD MM YYYY, settlement of the sale of Property 3 occurred. The disposals of the farming properties have all resulted in capital gains respectively.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-195 | Income Tax Assessment Act 1997 subsection 152-80(3) | Income Tax Assessment Act 1997 subdivision 152-C