Private ruling: Commissioner's discretion - deceased estate
Date of advice: 27 January 2026
Published: 30 March 2026
Ruling period: Year ended 30 June 20YY
Date scheme commenced: DDMM20YY

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 and disregard the capital gain or capital loss you made on the disposal? | A1: Yes. Having considered your circumstances and the relevant factors the Commissioner will allow an extension of time. You can claim the main residence exemption from capital gains tax (CGT) for up to 2 hectares. The 2 hectares you choose must include the land that is under the dwelling. Further information about the Commissioner's discretion can be found by searching ato.gov.au for 'QC 66057

Relevant facts and circumstances: After 20 September 1985, the deceased jointly purchased the dwelling situated at the property. The property is greater than 2 hectares in size. On DD MM 20XX, the deceased executed their final Will and testament. Under the Will, the deceased appointed Person A and Person B to be the joint trustees and executors of the Will. The property was not directly mentioned under the Will and formed part of the residue of the estate. Under clause 7 of the Will, the residue of estate would be divided between the deceased children Person C and Person D (the beneficiaries). On DD MM 20XX, the deceased had sole ownership of the property. The property was the deceased main residence and not used to produce income. On DD MM 20XX, the deceased passed. On DD MM 20XX, Probate was granted to Person A and Person B (the executors). In MM 20XX, Person A was hospitalised for several months. In MM 20XX, Person A was hospitalised again. Person D requested to purchase the property. In MM 20XX, Person C was released from prison. There was a domestic violence order in place between the beneficiaries. Despite the order, they both commenced living in the property together because they were unemployed and homeless. On DD MM 20XX, Person D signed the contract of sale subject to finance. On DD MM 20XX, Person D's contract was terminated, due to not being able to satisfy the finance condition. Following the termination of the contract, the beneficiaries continued to reside at the property despite the executors' multiple requests for them to vacate the property. On DD MM 20XX, Person B attended the property and observed significant damage and neglect on the property. In this condition the property was not presentable for sale. In MM 20XX, the Police executed a search warrant at the property. The police found illegal paraphernalia on the property. In MM 20XX, Person C was charged with offences that resulted in their return to prison. Person D allowed another parolee to reside at the property, without the consent of the executors. In MM 20XX, steps were taken to recover the property from Person D and other unknown people. By MM 20XX, the property was vacated. However, the property was significantly damaged - with clogged sewage pipes and evidence of flood damage, broken windows, burnt and damaged carpet, broken furniture, the house was filled with rubbish, and car bodies were located around the property. Person A requested to purchase the property and was given a strict timeframe to confirm they had the finances to purchase it. In XXXX 20XX, the executors attended to rectifying the damage and cleaning the property. There was not enough money in the Estate trust account to cover costs at this stage, so they attend personally to this. However, both were in their late 60s, and Person A had ongoing health issues, so progression was very slow. For a period, Person A was in and out of hospital and travelling to and from their home located in a separate state. The timeframe Person A was given to arrange finance lapsed without action because of Person A's repeated hospitalisation. In MM 20XX, the executors appointed a real estate agency to sell the property, however listing of the property was delayed when Person C was released from prison and was again homeless and asking to live in the property. This led to a conflict between the beneficiaries and between the beneficiaries and the executors. Person B was assaulted by one of the beneficiaries, although declined to pursue charges. Following the assault, they declined to directly act on in the matter. On DD MM 20XX, the beneficiaries were again arrested by police, thereby vacating the property. The property again needed to be cleaned. Both beneficiaries individually threatened the executors. Both claimed (though for different reasons) that the state of the property was the executors' fault. In MM 20XX, the property was listed for sale on an 'as is' basis. On DD MM 20XX, you signed a contract of sale with an independent party. On DD MM 20XX, the property settled. Since the property has sold, both Person A and Person B have passed away.

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