Private ruling: Deceased estate - 2-year discretion
Date of advice: 2 June 2026
Published: 17 August 2026
Ruling period: Year ended 30 June 20YY | Year ending 30 June 20YY
Date scheme commenced: DD MM YYYY

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 (Property 1) and disregard the capital gain or capital loss you made on the dwelling? | 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'. Capital gains tax | Q2: Can section 118-145 of the ITAA 1997 apply in conjunction with section 118-210 of the ITAA 1997? | A2: Yes. Section 118-145 of the ITAA 1997 provides that if a dwelling was the main residence of an individual, they may continue to treat it as their main residence after it ceases to be their main residence. The provision does not require the individual to have an ownership interest in the dwelling. Therefore, where a property was acquired under a will by a trustee for occupation by an individual for the purposes of section 118-210 of the ITAA 1997, and subsequently that individual moves out of the property, it may continue to be treated as the main residence of that individual pursuant to section 118-145 of the ITAA 1997. | Q3: Are the trustees of the Estate eligible for a main residence exemption under section 118-210 of the ITAA 1997 in relation to the disposal of Property 2? | A3: Yes. We have considered your circumstances and Taxation Determination TD 1999/74 Income tax: capital gains: in what circumstances does a trustee of a deceased estate acquire an ownership interest in a dwelling 'under the deceased's will' for the purposes of subsection 118-210(1) of the Income Tax Assessment Act 1997? TD 1999/74 states that the connection required between the trustee's acquisition and the deceased's will is not a strict one; it is sufficient if the acquisition is in pursuance of the will or under the authority of the will. In your case, we accept that the property was acquired under the will by the trustees for occupation by an individual for the purposes of subsection 118-210(1) of the ITAA 1997. As Property 2 was the main residence of the individual for part of the trustees' period of ownership, they are entitled to a main residence exemption under section 118-210 of the ITAA 1997.

Relevant facts and circumstances: On DD MM 19YY, the deceased acquired a property. On DD MM 19YY, the deceased passed away. Property 1 is less than 2 hectares in size. Property 1 was the deceased's main residence just before their passing. The Property 1 was never used for the purpose of producing income during the deceased's ownership. The deceased's child was living at the property and continued to live there. On DD MM 19YY, Probate was granted to a State Trustee. The Deceased's last will and testament (the 'Will') included various clauses to deal with their assets. The Will had a right to reside for the deceased's child. The deceased's c asked the Trustee of the estate to sell Property 1 and with the funds purchased Property 2. The State Trustee received Counsel advice on DD MM 20YY about purchasing another property. They confirmed: • They had the power to sell Property 1 and use the proceeds to purchase Property 2 • Property 2 is settled land and subject to the terms of the Will. Property 1 was sold in MM 20YY and was covered by the Will right to reside. Property 2 settlement occurring on DD MM 20YY. Property 2 was fully funded by the sale of the original residence. The deceased's child moved into the Property 2 as their principal place of residence. In MM 20YY the deceased's child moved into an accommodation facility. On DD MM 20YY, the deceased's child passed away. In MM 20YY, Property 2 was listed for sale. On DD MM 20YY, Property 2 was sold. On DD MM 20YY, Property 2 settled.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-145 | Income Tax Assessment Act 1997 section 118-210 | Income Tax Assessment Act 1997 section 118-195