Private ruling: CGT - exemption
Date of advice: 11 July 2025
Published: 8 September 2025
Ruling period: Year ended 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Are you entitled to a partial exemption for capital gains tax arising from the sale of the property under section 118-200 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. Entitlement to a partial exemption arises because this property was the deceased's main residence for the whole of their ownership period. | Q2: Will the Commissioner exercise the discretion under subsection 118-200(3) of the ITAA 1997 to allow an extension of time for you to dispose of your ownership interest in the dwelling? | A2: 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'. | Q3: Do you need to adjust the partial exemption to increase any non-main residence days due to the Deceased using the Property to produce assessable income under section 118-190 of the ITAA 1997? | A3: Yes. As the property was used by the deceased for the purpose of deriving assessable income while it was their main residence (including just before they passed away). Taxation Determination TD 1999/66 provides guidance about how to make this adjustment. Further information can be found by searching ato.gov.au for 'QC 66033'.

Relevant facts and circumstances: The deceased passed away a number of years ago leaving a will. The deceased lived at the property as their main residence for the whole of their ownership period. The property was partially inherited by the deceased and partially purchased by the deceased. The property was less than 2 hectares in size. The will appointed the executor and trustee. The beneficiaries were the deceased's children and spouse. The deceased spouse remained living in the property for several months after the date of death. The deceased children remained living in the property for a couple of years. A percentage of the property was rented out for several months to a third party informally with no rental agreement. The majority of the property was vacant for a number of months. All of the property was vacant after the rental period ended until the property was sold. There was a delay in issuing a death certificate as an autopsy needed to be undertaken to determine a cause of death, in addition to this there was a delay in processing the toxicology request by the coroner due to a backlog of requests remaining to be processed from Covid-19 pandemic, which resulted in a delay in being able to apply for probate. Probate was granted to the executor. A further delay was caused due to a term in the deceased Will expressing the deceased wish that the property only be sold if and after the beneficiaries could not otherwise agree for them to purchase the property. The period of negotiations was for a few months in relation to the beneficiaries purchasing the property. Lawyers were engaged by both parties. Negotiations were first started between the beneficiaries to purchase the property from the deceased's spouse. The property was placed on the market. Settlement occurred a few months after the property was placed on the market.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-190 | Income Tax Assessment Act 1997 section 118-200