Private ruling: Deceased estate
Date of advice: 25 February 2026
Published: 20 April 2026
Ruling period: Year ended 30 June 20YY
Date scheme commenced: DD MM 19YY

Ruling: Q1: Does a CGT event happen to The Trustee of Estate 1 on the disposal of the property? | A1: No. Section 106-50 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that where a beneficiary becomes absolutely entitled to a CGT asset as against the trustee of a trust, the asset is treated as being owned by the beneficiary for CGT purposes. Person B was named as the executor and sole beneficiary in the will of Person A. Person B obtained probate and completed the administration of Person A's estate (Estate 1) save for a transfer of the title of the property from their capacity as legal personal representative of Person A's estate to themselves as the sole beneficiary of the estate. All testamentary expenses had been dealt with, bank accounts and term deposits had been closed, and cash, furniture and motor vehicle had been dealt with by Person B, and the residue of the estate had been ascertained. Consequently, Person B had a vested, indefeasible and absolute interest in the property and could call for it to be transferred to themselves. Therefore, Person B was absolutely entitled to the property and was the owner for CGT purposes. After Person B's death, their estate (Estate 2) is treated as the owner of the property for CGT purposes. Therefore, the CGT event on the disposal of the property happened to Person B's estate rather than Person A's estate. | Q2: Does section 118-195 of the ITAA 1997 apply to exempt the capital gain for The Trustee for Estate 2 on the disposal of the property? | A2: Yes. As discussed above, Person B and then Person B's estate are treated as having been the owner of the property for CGT purposes. Section 118-195 of the ITAA 1997 applies to exempt the capital gain on the disposal of the property as it was Person B's main residence when they died and it was sold by their estate within 2 years of their death.

Relevant facts and circumstances: Person A passed away on DD MM 19YY. The property is situated on less than 2 hectares of land. The property was purchased before 1985 by Person A and was their main residence at the date of their death. Under Person A's will, the sole beneficiary and executor was Person B Person A's spouse had pre-deceased them. Person B obtained probate for Person B's estate on DD MM 19YY. The title to the property was transferred into Person B's name as legal personal representative for Person A's estate. Person B completed the administration of Person A's estate save for a transfer of the title of the property from their capacity as a legal personal representative of Person A's estate to themselves as the sole beneficiary of the estate. All testamentary expenses had been dealt with, bank accounts and term deposits had been closed, and cash, furniture and motor vehicle had been dealt with by Person B, and the residue of the estate had been ascertained. The property remained vacant from Person A's death until Person B moved into the property in 20YY The property was Person B's main residence until they moved into a nursing home approximately X months before their death on DD MM 20YY. The property has never been used for income producing purposes. Person B died intestate with the state trustee in the relevant state being granted Letters of Administration for the estate. As Person B had never updated the title to the dwelling from their name as legal personal representative of Person A's estate, the state trustee was appointed the new trustee for Person A's estate in order to sell the dwelling. Title to the property was transferred to the state trustee as trustee for Person A's estate, who then sold the property with settlement taking place within 2 years of Person B's death. As the trustee for Person B's estate, the state trustee has chosen to continue to treat the dwelling as Person B's main residence from when they moved into a nursing home until their death under section 118-145 of the ITAA 1997.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 section 106-50 | Income Tax Assessment Act 1997 section 118-145 | Income Tax Assessment Act 1997 section 118-195