Private ruling: CGT - deceased estate
Date of advice: 3 October 2025
Published: 17 November 2025
Ruling period: Income year ended 30 June 20XX

Ruling: Q1: Will the Commissioner exercise the discretion under subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the 2-year time period by which the Dwelling on the Property owned by the Estate ends? | A1: Yes, until Z September 20XX. | Q2: If the answer to Question 1 is 'No', is a partial main residence exemption allowable to the Estate under section 118-200 of the ITAA 1997 with respect to the disposal of the Dwelling? | A2: Not necessary to answer given our answer to Question 1. | Q3: If the answer to Question 1 is ' No ' , did table item 3 of subsection 128-15(4) of the ITAA 1997 apply to modify the first element of the cost base of the Dwelling on the Property in the hands of the Estate? | A3: Not necessary to answer given our answer to Question 1. | Q4: Will the Commissioner exercise the discretion under subsection 99A(2) of the Income Tax Assessment Act 1936 (ITAA 1936) to tax the net income of the Estate in the year ended 30 June 2022 to which no beneficiary is presently entitled under section 99 of the ITAA 1936? | A4: Yes | Q5: Is the Estate entitled to a discount percentage of 50% of the capital gain made from the disposal of the Property under section 115-100 of the ITAA 1997? | A5: Yes | Q6: Is the Estate required to include the capital gain made on the disposal of the Property in the Estate's trust return for the year ended 30 June 20XX under section 104-10 of the ITAA 1997? | A6: Yes | Q7: Are the Executors of the Estate able to amend the Estate's trust return for the year ended 30 June 20XX to include the capital gain on the disposal of the Property? | A7: Yes | Q8: On the basis that the answer to Question 7 is 'Yes' and provided the amendment occurs within one month of settlement of the contract for the disposal of the Property, will the Commissioner exercise the discretion to remit the liability for shortfall interest charges (SIC) and general interest charges (GIC) that arise as a result of the inclusion of the capital gain from the disposal of the Property in the Estate's trust return for the income year ended 30 June 20XX? | A8: Yes

Relevant facts and circumstances: 1. Person A died on X September 20XX. 2. The Will of Person A was dated in August 19XX. 3. The Will appointed Person B and Person C as executors and trustees of the Estate (Executors). The Supreme Court of Victoria granted Probate in respect of the Will in February 20XX. 4. The beneficiaries of the Estate are Person B, Person C, Person D, Person E and Person F (Beneficiaries). 5. The Estate's inventory of assets was outlined in the Probate documents and included the Property. 6. At the time of their death Person A owned the Property which consisted of more than 2 hectares of rural land. 7. The Property was acquired jointly with her late husband Person G in 3 parcels between 19XX and 19XX. The 50% interest in the Property that Person A acquired between 19XX and 19XX is referred to as Interest 1 for the purposes of this ruling. 8. The Property included a Dwelling on it which was their main residence. 9. Person A and Person G utilised the Property for farming activities. 10. Person G died in 19XX and their half interest in the Property passed to Person A at this time. The 50% interest in the Property that Person A inherited from Person G is referred to as Interest 2 for the purposes of this ruling. 11. Person A continued the farming activities by themself until around 19XX. 12. The Property was leased to a neighbour for commercial farming activities from around 19XX until 20XX and has not been used for any income producing purpose since 20XX. 13. Person A continued residing in the Dwelling until sometime in or around 20XX, at which time they moved into a nursing home. At no time has the Dwelling been rented out or occupied by a life tenant. 14. An urban growth plan adopted by a city council in 20XX (and amended in 20XX) identified the Property as being within a precinct earmarked for future conventional residential development. 15. In a letter dated XX June 20XX from the council to Person A, the council invited Person A to attend a meeting to discuss a proposal to transition the Property to a residential zone. It was indicated that the council had advised an engineering/surveying company that a planning scheme amendment application would be accepted to rezone land, including the Property, in accordance with the urban growth plan. 16. In November 20XX, Person C, under a power of attorney, signed an authorisation with an engineering/surveying company to participate in a Development Plan Overlay rezoning project to rezone the land from Rural Living Zone to General Residential Zone 1, which was converted to a Section 96A rezoning process in November 20XX. 17. In September 20XX, a rezoning application was lodged by the engineering/surveying company with the council. At this time, the Executors anticipated that the rezoning of the Property would be completed by late December 20XX. 18. In April 20XX, the Estate received a private ruling (Authorisation number 1051827021560) for the income years ended 30 June 20XX and 30 June 20XX confirming that a sale of the Property would be assessable under the capital gains tax provisions contained in Parts 3-1 and 3-3 of the ITAA 1997. 19. The Executors signed an exclusive sale authority for the Property on X July 20XX and the Property was listed for sale publicly after that with an expression of interest for the Property due on Y August 2021. 20. In September 20XX, the Executors entered into a contract of sale for the Property with the Purchaser. The purchase price under the contract of sale was $XX. Settlement was due on the earlier of 3 years from the date of the contract of sale, or 21 days from the date upon which the rezoning of the Property was gazetted. At this time, the Executors had been in receipt of communication from the council indicating that the rezoning process would be complete in 20XX. 21. Two Deeds of Variation were entered into between the Executors and the Purchaser in relation to the contract of sale for the Property. These Deeds of Variation were initiated by the Purchaser and were a result of ongoing delays in the rezoning process. 22. The first Deed of Variation was entered into in December 20XX. The contract of sale was varied under this Deed to the extent that settlement of the Property was delayed until March 20XX and the purchase price for the Property was increased. This extended settlement date of March 20XX was struck based on the Purchaser's view at the time that it would allow enough time for the rezoning to occur beforehand. 23. The second Deed of Variation was entered into in December 20XX. The contract of sale was varied under this Deed to the extent that settlement of the Property was further delayed until Y September 20XX. Again, this extended settlement date of Y September 2025 was struck based on the Purchaser's view at the time that it would allow enough time for the rezoning to occur beforehand. 24. Ministerial approval for the rezoning process was provided on YY June 20XX and Gazettal of the rezoning process happened on ZZ June 20XX. The Property was therefore rezoned on ZZ June 20XX. 25. The contract for sale of the Property was settled on Z September 20XX. The Executors and the Purchaser acted on arm's length terms and are not related parties. 26. Although Person A moved into a nursing home in or around 2015, the Executors made the choice (on Person A's behalf) to continue to treat the Dwelling as Person A's main residence until the date of their death (in September 20XX) pursuant to the 'absence rule' in section 118-145 of the ITAA 1997. No other dwelling was treated as Person A's main residence during that period. 27. The Estate does not qualify for the safe harbour pursuant to paragraph 11 of 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) in relation to its disposal of the Dwelling. 28. Person A was not an 'excluded foreign resident' within the meaning of subsection 118-110(4) of the ITAA 1997 just before her death. 29. The Executors and the Beneficiaries are residents of Australia for tax purposes. 30. The assets held by the Estate consist only of public company shares or other interests in widely-held entities, death benefit superannuation, Australian real property, and cash and personal assets. 31. The Estate: (i) does not hold shares, units or other similar interests that carry rights to receive discretionary distributions of income or capital; (ii) is not a discretionary object in relation to another trust; and (iii) does not hold shares in any private companies or units in any private trusts. 32. No amounts have been passed to or lent to the Estate. 33. The proceeds from the disposal of the Property will be distributed to the Beneficiaries during the 2026 income year. 34. The Estate lodged a trust income tax return for the income year ended 30 June 20XX. 35. The Estate was not a small business entity nor a medium business entity for the 20XX income year.

Relevant legislative provisions: Income Tax Assessment Act 1936 section 99 | Income Tax Assessment Act 1936 section 99A | Income Tax Assessment Act 1936 subsection 99A(2) | Income Tax Assessment Act 1936 paragraph 99A(2)(a) | Income Tax Assessment Act 1936 s ubparagraph 99A(2)(a)(i) | Income Tax Assessment Act 1936 paragraph 99A(2)(b) | Income Tax Assessment Act 1936 paragraph 99A(2)(c) | Income Tax Assessment Act 1936 paragraph 99A(2)(d) | Income Tax Assessment Act 1936 subsection 99A(3) | Income Tax Assessment Act 1936 subsection 99A(3A) | Income Tax Assessment Act 1936 section 170 | Income Tax Assessment Act 1936 subsection 170(1) | Income Tax Assessment Act 1997 section 5-15 | Income Tax Assessment Act 1997 Part 3-1 | Income Tax Assessment Act 1997 section 102-5 | Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 subsection 104-10(1) | Income Tax Assessment Act 1997 subsection 104-10(2) | Income Tax Assessment Act 1997 subsection 104-10(3) | Income Tax Assessment Act 1997 Division 115 | Income Tax Assessment Act 1997 section 115-10 | Income Tax Assessment Act 1997 section 115-15 | Income Tax Assessment Act 1997 section 115-20 | Income Tax Assessment Act 1997 section 115-25 | Income Tax Assessment Act 1997 subsection 115-30(1) | Income Tax Assessment Act 1997 section 115-100 | Income Tax Assessment Act 1997 subparagraph 115-100(a)(ii) | Income Tax Assessment Act 1997 section 115-222 | Income Tax Assessment Act 1997 Subdivision 118-B | Income Tax Assessment Act 1997 subsection 118-110(4) | Income Tax Assessment Act 1997 section 118-115 | Income Tax Assessment Act 1997 section 118-120 | Income Tax Assessment Act 1997 subsection 118-130(3) | Income Tax Assessment Act 1997 section 118-145 | Income Tax Assessment Act 1997 section 118-195 | Income Tax Assessment Act 1997 subsection 118-195(1) | Income Tax Assessment Act 1997 subsection 118-195(2) | Income Tax Assessment Act 1997 section 118-200 | Income Tax Assessment Act 1997 Part 3-3 | Income Tax Assessment Act 1997 subsection 128-15(4) | Taxation Administration Act 1953 section 8AAG | Taxation Administration Act 1953 subsection 280-100(1) of Schedule 1 | Taxation Administration Act 1953 subsection 280-100(2) of Schedule 1 | Taxation Administration Act 1953 subsection 280-160(1) of Schedule 1

Reasons for decision: Summary: The Commissioner exercises the discretion under table item 1 of subsection 118-195(1) to extend the time limit by which the Estate's interest in the Dwelling on the Property ended until Z September 2025. | Detailed Reasoning - Detailed reasoning: Section 118-195 disregards any capital gain or capital loss made from a CGT event that happens in relation to a dwelling, or the taxpayer's ownership interest in it, where the following conditions are satisfied: • the taxpayer is an individual to whom the ownership interest is passed as a beneficiary in a deceased estate, or the taxpayer owns the interest as a trustee of a deceased estate; • either: o the ownership interest was acquired by the deceased before 20 September 1985; or o the ownership interest was acquired by the deceased on or after 20 September 1985 and the dwelling was the deceased's main residence just before their death and was not then being used for income producing purposes; • either: o the taxpayer's ownership interest ends within 2 years of the deceased's death, or within a longer period allowed by the Commissioner; or o from the time of the deceased's death until the taxpayer's ownership interest ends, the dwelling was used in one of the ways listed in column 3 of table item 2 of subsection 118-195(1); • the deceased was not an excluded foreign resident just before their death; and • the capital gain or capital loss made by the taxpayer arose from a CGT event listed in subsection 118-195(2). PCG 2019/5 explains how the CGT main residence exemption may apply to the disposal of a dwelling by a beneficiary or a trustee of a deceased estate and the factors which the Commissioner gives regard to in considering whether or not to grant an extension of time. Paragraph 3 of PCG 2019/5 states: Generally, [the Commissioner] will allow a longer period where the dwelling could not be sold and settled within 2 years of the deceased's death due to reasons beyond your control that existed for a significant portion of the first 2 years. Paragraph 12 of PCG 2019/5 sets out the circumstances favouring a longer period by which the taxpayer's ownership interest in the dwelling ends. They are: • the ownership of the dwelling, or the will, is challenged • a life tenancy or other equitable interest given in the will delays the disposal of the dwelling • the complexity of the deceased estate delays the completion of administration of the estate • settlement of the contract of sale of the dwelling is delayed or falls through for reasons outside of your control, or • restrictions on real estate activities imposed by a government authority in response to the COVID-19 pandemic. The Commissioner may also consider other factors relevant to the exercise of the discretion, as listed in paragraph 17 of PCG 2019/5 to include: • the sensitivity of your personal circumstances and of other surviving relatives of the deceased • the degree of difficulty in locating all beneficiaries required to prove the will • any period the dwelling was used to produce assessable income, and • the length of time you held the ownership interest in the dwelling. Conversely, paragraph 13 of PCG 2019/5 sets out the circumstances that the Commissioner considers cannot be material to the delays in the disposal of the taxpayer's ownership interest. They are: • waiting for the property market to pick up before selling the dwelling • waiting for refurbishment of the dwelling to improve the sale price • inconvenience on the part of the trustee or beneficiary to organise the sale of the dwelling, or • unexplained periods of inactivity by the executor in attending to the administration of the estate. A dwelling is defined in section 118-115 and does not include any land adjacent to a building except as provided in section 118-120. Section 118-120 extends the definition of dwelling for the purposes of Subdivision 118-B to include adjacent land to the extent that that adjacent land was used primarily for private or domestic purposes in association with the dwelling and does not exceed 2 hectares, less the area of the land immediately under the dwelling. | Detailed Reasoning - Application to your circumstances: The Dwelling, consisting of the residential accommodation located on the Property in which Person A resided, plus 2 hectares of the adjacent land (less the area of land immediately under the residential accommodation), was owned by Person B and Person C as trustees of the Estate. CGT event A1 under section 104-10 (being one of the events listed in subsection 118-195(2)) happened to them in relation to the Property (including the Dwelling) in September 2021 (in the 2022 income year) upon entry into the contract of sale for the Property. Interest 1 in the Property (including the Dwelling) was acquired by Person A before 20 September 1985. Interest 2 in the Property (including the Dwelling) was acquired by Person A after 20 September 1985. The Dwelling was Person A's main residence just before her death (pursuant to the application of section 118-145) and was not then being used for the purposes of producing assessable income. For a dwelling that you have a contract for the happening of a CGT event, you have an ownership interest in it until your legal ownership of it ends (subsection 118-130(3)). The interest owned by the Estate in the Dwelling ended on Z September 20XX. The ownership interest of the Estate did not end within 2 years of the death of Person A (on X September 20XX), thereby exceeding the statutory limit in column 3 of table item 1 of subsection 118-195(1), and the Dwelling was not used in one of the ways listed in column 3 of table item 2 of subsection 118-195(1) from the time of Person A's death until Z September 20XX. Consequently, section 118-195 does not apply in respect of any capital gain or capital loss the Estate made from the sale of the Dwelling, unless the Commissioner extends the time limit. The Commissioner considers it appropriate to exercise the discretion under subsection 118-195(1) to extend the time limit by which the interest in the Dwelling owned by the Estate ended until the time at which that ownership interest ended, i.e. Z September 20XX. The basis for this decision is largely attributed to the fact that both the selling of the Property and settling of the contract for sale of the Property was (in large part) due to events beyond the Estate's control, specifically the rezoning process. Although the rezoning process commenced prior to Person A's death, its completion was subject to ongoing delays and only completed on ZZ June 20XX. We accept that it was not likely feasible for the Estate to either sell the property: • as commercial farmland and/or rural living, as any prospective purchaser would have taken into account that the efforts to rezone the area to residential land had commenced in accordance with the council's stated intention; or • as residential land, as any prospective purchaser would have considered the fact that efforts to rezone the area were ongoing but not yet achieved. It was also unfeasible that any prospective purchaser purchasing the Property on the basis of the rezoning to residential use would have either agreed to an earlier contract of sale or accepted a settlement date earlier than the gazettal of the Property's rezoning. We also accept that the deferral of the settlement date on a couple of occasions at the initiation of the Purchaser due to the ongoing delays to the rezoning process is not unreasonable. The basis for the decision to exercise the discretion under subsection 118-195(1) also includes the following: • as long as it happened within 3 years from the date the contract of sale was entered into, settlement of the contract was originally scheduled to happen within 21 days from the date rezoning of the Property was gazetted; • the delays caused by the imposition of the COVID-19 lockdowns imposed by the Victorian Government for significant periods of time from March 20XX to October 20XX which restricted both interstate travel and travel between metropolitan Melbourne and rural Victoria and hampered the ability of the Executors to effectively arrange for the disposal of the Property; • the Property was not used to derive assessable income during the relevant period; and • none of the factors in paragraph 13 of PCG 2019/5 were relevant to the delay in disposing of the Property. | Summary: After consideration of the relevant factors, the Commissioner is of the opinion that it would be unreasonable that section 99A of the ITAA 1936 should apply in relation to the Estate in relation to the income year ended 30 June 20XX. Therefore, the Commissioner will exercise the discretion, under subsection 99A(2) of the ITAA 1936 to allow section 99 of the ITAA 1936 to apply to the income year ended 30 June 2022 where the trustee of the Estate is liable to pay tax on income to which no beneficiary is presently entitled. | Detailed Reasoning - Detailed reasoning: Under subsection 99A(2) of the ITAA 1936, section 99A of the ITAA 1936 will not apply to the net income of a resident trust estate retained by certain trust estates where the '... Commissioner is of the opinion that it would be unreasonable that this section should apply in relation to that trust estate in relation to that year of income ...'. Instead section 99 of the ITAA 1936 will apply to that net income such that the net income of the trust will be taxed at the progressive rates applicable to certain individuals rather than at the flat top marginal tax rate (although, the availability of the tax-free threshold is only available to trustees of trusts where the relevant person died less than 3 years before the end of the relevant year of income). The types of trust estate in respect of which the Commissioner's discretion may be exercised are listed in paragraphs 99A(2)(a) to (d) of the ITAA 1936 and include a trust estate that resulted from a will (paragraph 99A(2)(a) of the ITAA 1936). In forming the opinion for the purposes of subsection 99A(2) of the ITAA 1936 the Commissioner is required to have regard to the matters in subsections 99A(3) and (3A) of the ITAA 1936. These provide: 99A(3) In forming an opinion for the purposes of subsection (2): (a) the Commissioner shall have regard to the circumstances in which and the conditions, if any, upon which, at any time, property (including money) was acquired by or lent to the trust estate, income was derived by the trust estate, benefits were conferred on the trust estate or special rights or privileges were conferred on or attached to property of the trust estate, whether or not the rights or privileges have been exercised; (b) if a person who has, at any time, directly or indirectly: (i) transferred or lent any property (including money) to, or conferred any benefits on, the trust estate; or (ii) conferred or attached any special right or privilege, or done any act or thing, either alone or together with another person or persons, that has resulted in the conferring or attaching of any special right or privilege, on or to property of the trust estate whether or not the right or privilege has been exercised; has not, at any time, directly or indirectly: (iii) transferred or lent any property (including money) to, or conferred any benefits on, another trust estate; or (iv) conferred or attached any special right or privilege, or done any act or thing, either alone or together with another person or persons, that has resulted in the conferring or attaching of any special right or privilege, on or to property of another trust estate, whether or not the right or privilege has been exercised; the Commissioner shall have regard to that fact; and (c) the Commissioner shall have regard to such other matters, if any, as he or she thinks fit. 99A(3A) For the purposes of the application of paragraph (3)(a) in relation to a trust estate of the kind referred to in paragraph (2)(a), a reference in that first-mentioned paragraph to the trust estate shall be read as including a reference to the person as a result of whose death the trust estate arose. In the High Court case of Giris Pty. Ltd. V. Federal Commissioner Of Taxation Windeyer J described the purpose of section 99A of the ITAA 1936 as: That purpose I take it is to enable the Commissioner to keep s. 99A as an instrument to prevent avoidance of taxation by the medium of trusts, but not to use it when to do so would seem to him not in accordance with that purpose. [at 384] This view was confirmed by Stephen J in the High Court case of Perron (as trustee for the L.M. Brennan Trust) v. Federal Commissioner of Taxation . In Case A50 G. R. Thompson (Member) proposed a number of factors that should be considered for the purposes of the discretion in subsection 99A(2) of the ITAA 1936 [at 302]: 1. Protection of the revenue - This first proposition needs no lengthy exposition. It accords with my understanding of a clear policy of the Income Tax Assessment Act , and indeed of all taxing statutes. In the Income Tax Assessment Act , it finds its highest point in sec. 260. 2. The interests of taxpayers generally - This principle is, I think, complementary to the first principle, for it is trite to say that each successful tax avoiding scheme results in a proportionate increase in the tax burden to be borne by all other taxpayers. In taking into account this principle, it would, I think, be relevant to consider whether the type of arrangement under consideration in any particular case is wide-spread or increasing in its incidence. The discretion could then be exercised to discourage practices which are causing the tax burden to fall unevenly on taxpayers within a particular class. 3. Protection of legitimate and reasonable family and business arrangements - The right of an individual to deal with his own property and to arrange the affairs of his family and his business in any way that he sees fit, subject only to the restrictions imposed by statute or common law, is, I think, well entrenched in the sociological, political and legal structure of the Australian community. It seems to me that it would be inappropriate to use a discretion under a taxing statute to discourage the exercise of that right except in cases where such an exercise is to the detriment of the community at large. 4. Arrangements for the good of the public generally - One can readily envisage arrangements which fall for consideration under sec. 99A being of such a kind that, if such arrangements were discouraged, the springs of charity might tend to dry up. An example of such an arrangement would be a voluntary trust established inter vivos for the maintenance or education either of an infant or of a person of full age who is, say, mentally defective to the extent that he is under legal disability. The purpose and effect of such a trust could be to prevent the beneficiary from becoming a charge on the State. I would regard it as inappropriate, in the absence of any countervailing consideration, to use the discretion under sec. 99A to discourage such a charitable exercise. 5. Trusts arising out of the exercise of a public duty - Under this head I would include the administration of trusts such as those imposed upon trustees in bankruptcy by the Bankruptcy Act or those imposed upon officers of the court by order of the various courts. Under the broad terms of sec. 99A these fall for consideration and it seems to me that, to the extent to which the discretion under sec. 99A would be exercised to the detriment of such trusts, the purposes of the statute or the order under which the trusts come into being would be frustrated. In considering these matters in Case A50 Thompson stated [at 302 and 303] that: 16. ... A wide survey and close scrutiny of all the surrounding circumstances, including, but not by any means limited to, an examination of the terms of any relevant instrument, the manner in which those terms have been or are capable of being implemented, the circumstances under which the trust is called into being, the overall effect achieved or sought to be achieved upon the tax affairs of all parties directly or indirectly affected by the trust and the manner in which the arrangement is administered, would be called for. This enquiry should, I think, furnish the mind in such a way that the scale will fall either on the side of practices which ought to be discouraged or on the side of those which ought not to be the subject of any deterrent. [emphasis added] The matters that are considered to be particularly relevant to forming the opinion for the purposes of subsection 99A(2) of the ITAA 1936 are: • The Estate resulted from the Will of Person A (dated August 1998) and satisfies the requirement under subparagraph 99A(2)(a)(i) of the ITAA 1936. • In the income year ended 30 June 2022: - The trustee will retain an amount of trust income. - The Estate has been in its 'period of administration' (per Taxation Ruling IT 2622 Income tax: present entitlement during the stages of administration of deceased estates). - Tax has not been avoided by the exercise of the powers available to the trustee under the Will. - The Estate has been administered in a conventional manner by the trustee and not as a tax avoidance device. - The trustee has not entered into arrangements beyond the purpose for which section 99 was retained in the ITAA 1936 of a type that the Commissioner will seek to discourage. • The assets held by the Estate do not consist of: - investments in any private companies or private trusts; - other assets acquired at non-arm's length value; or - loans provided to related parties. • No property (other than that owned by Person A prior to her death) has been passed to or lent to the Estate. • The trustee did not avoid tax by exercising the powers available to them under the terms of the Will of Person A. Having regard to the above matters, and the legislated purpose of section 99A of the ITAA 1936 to prevent the use of trusts for tax avoidance, the Commissioner is of the opinion that it is unreasonable for section 99A to apply to the Estate in respect of the 2022 income year. | Summary: The Estate can reduce the capital gain made in relation to the disposal of the Property (excluding the Dwelling) by a discount percentage of 50% in accordance with section 115-100. | Detailed Reasoning - Detailed reasoning: Division 115 sets out the conditions in which an entity may be entitled to a discount capital gain. To be a discount capital gain, the capital gain must meet the requirements of sections 115-10, 115-15, 115-20 and 115-25. The requirement under section 115-10 is met as the capital gain was made by the Estate, a trust. The requirement under section 115-15 is met as the capital gain resulted from a CGT event which happened in September 2021, and therefore after 21 September 1999. The requirement under section 115-20 is met as the capital gain was worked out using a cost base calculated without reference to indexation. The requirement under section 115-25 is that the capital gain resulted from a CGT event happening to a CGT asset that was acquired by the entity making the capital gain at least 12 months before the CGT event. For the purposes of this requirement, the trustee of the Estate is deemed to have acquired: • Person A's Interest 1 in the Property (a pre-CGT asset) on X September 2019 (the time Person A died) in accordance with table item 5 in subsection 115-30(1); and • Person A's Interest 2 in the Property (a post-CGT asset) in 1987 (the time Person A acquired the asset) in accordance with table item 3 in subsection 115-30(1). The capital gain therefore resulted from a CGT event happening to CGT assets that were acquired by the Estate more than 12 months before the event, thereby satisfying the requirement under section 115-25. As all of the relevant requirements have been met, the capital gain made by the Estate from the sale of the Property (excluding the portion of the capital gain attributable to the Dwelling) is a discount capital gain. Pursuant to subparagraph 115-100(a)(ii), the discount percentage applied to the capital gain made by the Estate on the disposal of the Property is 50%. As section 99A of the ITAA 1936 does not apply in relation to the Estate in relation to the 2022 income year (as confirmed at question 4 of this ruling), the discount is not removed by virtue of the application of section 115-222. | Summary: The Estate is required to include the capital gain made on the disposal of the Property in the Estate's trust return for the year ended 30 June 20XX, and the Executors are permitted to amend that return to that end by Z October 20XX pursuant to subsection 170(1) of the ITAA 1936. Where the Estate lodges a request for amendment in respect of its 20XX trust return by Z October 2025 (being one month after the date of settlement of the contract of sale of the Property), the Commissioner confirms that any SIC and GIC which may be applicable will be remitted. | Detailed Reasoning - Detailed reasoning: Under subsection 104-10(1) the disposal of a CGT asset causes a CGT event A1 to happen. You dispose of an asset when a change in ownership occurs from you to another entity (subsection 104-10(2)). Subsection 104-10(3) provides that the timing of the event is when you enter into the contract for the disposal or, if there is no contract, when the change of ownership occurs. A contract generally comes into existence at the time an offer is accepted and signed by the vendor and the purchaser. A capital gain is included in your assessable income in the income year in which the CGT event occurs, as per section 102-5. As its title suggests, Taxation Determination TD 94/89 Income tax: capital gains: in what year of income is a taxpayer required for tax purposes to include a capital gain or loss in relation to land disposed of under a contract which is made in one year of income, but which is settled in a later year of income? ( TD 94/89 ) provides the Commissioner's view as to the year of income you are required to include a capital gain or capital loss in relation to land disposed of under a contract which is made in one year of income, but which is settled in a later year of income. TD 94/89 confirms that where the contract is settled in a later year of income, a taxpayer is required to include a capital gain or capital loss in the year of income in which the contract is made, not in the year of income in which the contract is settled. However, a taxpayer is not required to include any capital gain or capital loss in the appropriate year until an actual change of ownership occurs. Settlement effects a change of ownership and a disposal. When settlement occurs, the taxpayer is required to include any capital gain or capital loss in the year of income in which the contract was made. If an assessment is already made for that year of income, the taxpayer may need to have that assessment amended. Section 170 of the ITAA 1936 outlines the situations where the Commissioner may amend an assessment. The general rule is that the Commissioner may amend an assessment of a trustee of a trust estate for a year of income within 2 years after the day on which the Commissioner gives notice of the assessment to the trustee if the trust is a small business entity or medium business entity for that year (table item 3 in subsection 170(1) of the ITAA 1936). This means that the Commissioner may amend an assessment of a trustee of a trust estate within 4 years after the day on which the Commissioner gives notice of the assessment to the trustee where the trust is neither a small business entity nor medium business entity for the year. Under subsection 280-100(1) of Schedule 1 to the Taxation Administration Act 1953 (TAA) you are liable to pay SIC on an additional amount of income tax that you are liable to pay because the Commissioner amends your assessment for an income year. According to subsection 280-100(2) of Schedule 1 to the TAA, the shortfall period extends from the due date for payment of the earlier, understated assessment to the end of the day before the day on which the Commissioner gives you notice of the amended assessment. Under subsection 280-160(1) of Schedule 1 to the TAA, the Commissioner may remit all or part of an amount of SIC if the Commissioner considers it fair and reasonable to do so. Under section 5-15 you are liable to pay GIC on any part of an amount of income tax or SIC that remains unpaid after it becomes due to be paid. Under section 8AAG of the TAA, the Commissioner may remit all or part of an amount of GIC if the Commissioner considers it fair and reasonable to do so. Paragraph 5 of TD 94/89 explains that where an assessment is amended to include a net capital gain and a liability for interest arises in the circumstances contemplated by TD 94/89, the discretion to remit the interest charge in full would ordinarily be exercised providing requests for amendments are made within a reasonable time after the date of settlement. According to TD 94/89, in most cases a reasonable time is considered to be a period of one month after settlement. | Detailed Reasoning - Application to your circumstances: As the contract of sale for the Property was entered into in September 20XX, the CGT event A1 under subsection 104-10(1) happened in the 20XX income year, and the capital gain from that event was derived by the Estate in that year. Whilst the Estate is required to include the capital gain in its income tax return for the 20XX income year (as part of the calculation of its net income), it was not required to include that capital gain until such time as settlement occurred (i.e. when there was a change of ownership on Z September 20XX). As the Estate was not a small business entity and was not a medium business entity for the 20XX income year, the Commissioner has a 4 year period to amend the assessment of the trustee of the Estate in respect of that income year. Where the Estate lodges a request for amendment in respect of its 20XX trust return by Z October 20XX: • the amendment of the assessment in respect of the 20XX income year to give effect to subsection 104-10(3) will be within the 4 year period to amend; and • it is considered appropriate for the Commissioner to remit any SIC and GIC imposed on the amended assessment for the 20XX income year in full on account of that amended assessment having been lodged within one month of the date of settlement.

Reasons for decision: All subsequent legislative references are to the ITAA 1997, unless otherwise indicated.