Private ruling: Commissioner's discretion - deceased estate
Date of advice: 25 March 2026
Published: 9 June 2026
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 January 20XX

Ruling: Q1: Did a CGT event A1 occur when you disposed of your 50% interest in the property to your sibling? | A1: Yes. CGT event A1 occurred when you disposed of your 50% interest in the property to your sibling. | Q2: Will the Commissioner exercise his discretion under section 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the timeframe beyond two years? | A2: No. The Commissioner will not exercise his discretion under section 118-195 ITAA 1997 to extend the timeframe beyond two years.

Relevant facts and circumstances: You, the taxpayer, and your sibling, each acquired a 50% interest in 2 houses from your parent's deceased estate, both acquired prior to 20 September 1985. Your parent, the 'deceased', passed away on XX XXXXXXX 20XX and probate of their estate was granted 7 months later in XXXXXX 20XX. Your other parent predeceased your parent. Your parents owned both properties as joint tenants, 50:50 ownership share. Your other parent's ownership share passed to your parent on their death. The deceased's estate consisted of two properties, Property A and Property B. Property A (the 'Property'), located at Address 1 was your parent's principal place of residence and was never used for rental purposes. Property B at Address 2 was a rental property. The Property is approximately X metres square. The assets remained in your parent's estate XX XXXXXX 202X at which time you and your sibling, appointed a new solicitor to deal with concerns regarding delays in dealing with the estate. Both properties were transferred to you and your sibling, as executors and as beneficiaries, in XXXXXX 20XX, and as tenants in common in equal shares and proportions. Your sibling moved into the Property within the first two years of your parent's passing and declared the Property as their principal place of residence. Your sibling paid you a monetary consideration of $XXX,XXX on XX XXXXXXX 202X, X years after your parent's passing, for a transfer of your 50% interest in the Property. The Property was valued by X to be $XX,XXX to $XX,XXX higher than the consideration you received from your sibling. No income has been derived from the Property by yourself or your sibling.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 118-B | Income Tax Assessment Act 1997 section 118-195 | Income Tax Assessment Act 1997 Division 115 | Income Tax Assessment Act 1997 section 104-10

Reasons for decision: Summary: Yes. A CGT event A1 occurred when you disposed of your 50% interest in the Property to your sibling. | Detailed Reasoning - Detailed reasoning: When you disposed of your 50% interest in the Property to your sibling it triggered CGT event A1 under section 104-10 of the ITAA 1997 because there is a change in ownership. The time of the event is when the contract is entered into, or when ownership changes if there is no contract. | Detailed Reasoning - Question 2: Will the Commissioner exercise his discretion under section 118-195 of the ITAA 1997 to extend the timeframe beyond two years? | Summary: No. The Commissioner will not exercise his discretion under section 118-195 of the ITAA 1997 to extend the timeframe beyond two years. | Detailed Reasoning - Detailed reasoning: Whether the capital gain is exempt or not depends on whether the Property qualifies for the main residence exemption under Subdivision 118-B of the ITAA 1997. The key considerations include: • whether the Property was the deceased's main residence just before death - in your case it was • whether the Property being used to produce income at that time - in this case, no income producing activity occurred at the Property either at time of deceased's death or before this • whether the disposal occurred within two years of the deceased's death, or will the Commissioner exercised discretion under Practical Compliance Guidelines 2019/5 to extend the period? - in your case, the disposal did not occur within two years and therefore, would require the Commissioner to exercise his discretion. | Detailed Reasoning - Will the Commissioner exercise his discretion to extend the 2-year timeframe?: You advised that: • Your parent's date of death and the date of transfer to the beneficiaries occurred at least XX years apart • No facts or information has been provided to show that efforts were made by anyone to expedite the process • No compelling reasons for delay have been provided • There are several gaps in which no activity occurred in relation to disposal of the deceased's main residence, amounting to several years of inactivity. Practical Compliance Guideline PCG 2019/5 Capital gains tax and deceased estates - the Commissioner's discretion to extend the 2-year period to dispose of dwellings acquired from a deceased estate (PCG 2019/5), requires valid reasons for delay which may include complexity of the estate, disputes between beneficiaries, and complex legal issues. Based on the above, there is insufficient reasoning for the Commissioner to consider you could have disposed of your interest within the 2-year timeframe. Therefore, the Commissioner will not exercise his discretion to extend the timeframe for you to dispose of your ownership interest, meaning CGT will be liable on the disposal of your 50% ownership interest to your sibling. However, Division 115 of the ITAA 1997 outlines the rules for discount capital gains including eligibility criteria and calculation of discount percentages for capital gains made on certain assets: • The capital gain must be made by an individual, a complying superannuation entity, a trust or a life insurance company • The gain must result from a CGT event occurring after 11.45am on 21 September 1999 • The asset must not have an indexed cost base, and it must have been acquired at least 12 months before As the three conditions apply to your situation, you will be entitled to the 50% CGT discount.

Reasons for decision: These reasons for decision accompany the Notice of private ruling. | This is to explain how we reached our decision. This is not part of the private ruling.