Private ruling: CGT - deceased estate
Date of advice: 19 November 2025
Published: 5 January 2026
Ruling period: Year ended 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Does the 50% discount percentage under subparagraph 115-100(a)(ii) of the Income Tax Assessment Act 1997 (ITAA 1997) apply to the capital gain on the sale of the property? | A1: Yes.

Relevant facts and circumstances: The deceased died a few years ago. The deceased was a tax resident of Country X at their death. The deceased owned a property located in Australia (the property). The property is less than 2ha in size. Probate of the deceased's will was originally granted by a court in Country X and later resealed by the Supreme Court in the Australian state where the property is located. The Legal Personal Representative (LPR) of the deceased's estate is a foreign tax resident, being a tax resident of Country X. The property had originally been acquired by Person A and Person B pre-CGT. On the death of Person A on XX/XX/199X, Person B became the sole proprietor. On XX/XX/199X, the property was registered as joint tenants between Person B and their new de factor partner, the deceased. The deceased lived in the property from XX/XX/199X as their main residence until they returned to Country X in XX/20XX, where they remained until their death several years later. Person B continued to reside in the property after the deceased left, until they died on XX/XX/20XX. The property was subsequently registered in the deceased's name. The property has been sold and settled by the LPR during the 20YY-YY income year. The estate has no income, either in the Australian estate or the Country X estate. The estate only made a capital gain on the sale of the property. There were no distributions out of the estate prior to 30 June 20YY. The capital gain in relation to the sale of the property was not streamed to the beneficiaries pursuant to Subdivision 115-C of the ITAA 1997. The estate's assets only included assets the deceased owned at their date of death. There were no transfers of other property to the estate. There were no special rights or privileges attached to property of the estate. The estate's beneficiaries include Australian tax residents and foreign tax residents. The Commissioner has exercised the discretion under subsection 99A(2) of the Income Tax Assessment Act 1936 (ITAA 1936) to tax the net income of the trust estate to which no beneficiary is presently entitled to, under section 99 of the ITAA 1936 for the 2024-25 income year.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 115-5 | Income Tax Assessment Act 1997 section 115-10 | Income Tax Assessment Act 1997 section 115-25 | Income Tax Assessment Act 1997 section 115-30 | Income Tax Assessment Act 1997 subparagraph 115-100(a)(ii) | Income Tax Assessment Act 1997 section 115-120 | Income Tax Assessment Act 1997 section 115-222 | Income Tax Assessment Act 1936 section 98 | Income Tax Assessment Act 1936 section 99 | Income Tax Assessment Act 1936 section 99A

Reasons for decision: Summary: Section 115-10 of the ITAA 1997 includes a trust as a type of entity that is eligible to make a discount capital gain. A minimum 12 month ownership period is required for a discount capital gain (section 115-25 of the ITAA 1997). Section 115-30 of the ITAA 1997 provides that for a deceased estate asset that was acquired by the deceased after 19 September 19YY, the LPR is deemed to have acquired the asset when the deceased acquired it, for the purposes of meeting the 12 month ownership requirement. In this case, the capital gain on the sale of the property is a discount capital gain as per section 115-5 of the ITAA 1997 as it was made by a trust and the minimum 12 month ownership requirement has been met. The applicable 'discount percentage' is 50% as per subparagraph 115-100(a)(ii) of the ITAA 1997 as the gain was made by a trust (other than a complying superannuation entity). Section 115-120 of the ITAA 1997 does not apply to deny the discount because the trustee is not liable to be assessed under section 98 of the ITAA 1936. Rather the trustee will be assessed under either section 99 or section 99A of the ITAA 1936 as there is no beneficiary presently entitled to the income of the trust. Section 115-222 of the ITAA 1997 operates to remove the 50% CGT discount for trustees assessed under section 99A of the ITAA 1936, that is, where we have not exercised the section 99A discretion to assess the trustee under section 99 rather than section 99A of the ITAA 1936. In this case, the Commissioner has exercised the discretion to assess the trustee under section 99 rather than section 99A of the ITAA 1936. Therefore, section 115-222 of the ITAA 1997 will not operate to remove the 50% CGT discount. Consequently, in this case the trustee of the deceased estate will be entitled to the 50% CGT discount for the capital gain made on the disposal of the property.