Private ruling: Deceased estate 2-year discretion
Date of advice: 8 September 2025
Published: 10 November 2025
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion under section 118-195 of Income Tax Assessment Act 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. Further information about the Commissioner's discretion can be found by searching ato.gov.au for 'QC 66057'.

Relevant facts and circumstances: The deceased passed away on DD MM 20YY. The deceased acquired the property with their spouse after 20 September 1985. On DD MM 20YY, the deceased's spouse passed away and the deceased acquired their spouse's share of the property. The property was the main residence of the deceased just before they passed away and was not used to produce assessable income at that time. The property was situated on less than two hectares of land. The deceased's Will appointed Person A as the executor of their estate as the deceased's spouse had predeceased them. The deceased's Will provided that half of their estate was to be left to Person A and the other half was to be left to Person B and Person C, as tenants in common in equal shares. The deceased and their spouse had a foster child, Person D. Person D had lived with the deceased and their spouse for several years including from the time that the deceased and their spouse moved into the property. Person D was not a named beneficiary in the deceased's Will, however they continued to occupy the property following the deceased's death. Organisation A experienced some difficulties in obtaining instructions from Person D in a timely manner. On DD MM 20YY, Person D's lawyer made a family provision claim on the deceased's estate on Person D's behalf. On DD MM 20YY, Organisation A applied for probate. On DD MM 20YY, probate was granted. On DD MM 20YY, a property inspection was requested by Organisation A. The beneficiaries were also informed that probate had been granted. On DD MM 20YY, the property title was provided to Organisation A from Organisation B. On DD MM 20YY, an inspection of the property was unable to be conducted due to Covid-19 lockdowns. On DD MM 20YY, an inspection of the property was undertaken. On DD MM 20YY, Person D contacted Organisation A and advised that they did not wish to leave the property. Organisation A advised Person D that they were not a named beneficiary in the deceased's Will and that they needed to consult with their lawyers. On DD MM 20YY Organisation A sent a progress letter to the beneficiaries. On DD MM 20YY, Organisation A contacted Person D's lawyers and advised that Person D had phoned their office, and a letter was sent to the beneficiaries. Organisation A advised that the beneficiaries intended to avoid litigation and instead enter a deed of family arrangement. On DD MM 20YY, Organisation A spoke with Person A. Person A advised that the beneficiaries wanted Person D to vacate the property without an entitlement to the estate and that Person D also may make a claim against the estate. Person A advised they would contact a lawyer for advice. On DD MM 20YY, Person A advised Organisation A that they had consulted with a lawyer who was interstate who could not assist them. Person A advised that they intended to arrange for the property to be sold, however, also did not want Person D to vacate the property. Person A also advised that they wanted Person D to have a share of the estate. Organisation A advised Person A that Person D had a claim to the property and advised that written instructions were required from the beneficiaries. On DD MM 20YY, Person A notified Organisation A of a draft letter that they intended to send to them. On DD MM 20YY, a progress letter was sent to the beneficiaries. On DD MM 20YY, Organisation A consulted with Person D's lawyers. On DD MM 20YY, Person D's lawyers informed Organisation A that they would issue court proceedings regarding the family provision claim by Person D. Person D's lawyers requested an extension of time after several months. Throughout 20YY, Organisation A engaged with Person D's lawyers on several occasions. On DD MM 20YY, Person D advised that they had accepted the option to vacate the property. Person D intended to apply for alternative accommodation, however needed a notice to vacate the property to be eligible to do so. On DD MM 20YY, a draft of the terms of the deed of arrangement was emailed to the beneficiaries. On DD MM 20YY, Person A passed away, leaving a Will dated XX XX 20XX. Person A's beneficiaries advised that Person A's estate was insufficient in applying for probate, however they agreed to execute the deed of arrangement. On DD MM 20YY, the family provision claim was settled. The deed of arrangement required Person D to return some personal items to Organisation A which may be distributed amongst the beneficiaries. The deed of arrangement also required Person D to vacate the property within xx days, however Person D refused to leave. On DD MM 20YY, Person D vacated the property. On DD MM 20YY, Organisation A engaged the services of Organisation C to complete repairs to the property as the property had been subject to extensive damage following the deceased's death whilst Person D was residing in the property. On DD MM 20YY, Organisation C completed all repairs to the property preparation for sale. On DD MM 20YY, Organisation A engaged with Organisation D to commence the sale process. On DD MM 20YY, a contract was entered to sell the property, with settlement occurring on DD MM 20YY.

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