Private ruling: Deceased estate and capital gains tax
Published: 19 January 2026
Ruling period: Year ended 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: XX XXX 20XX

Ruling: Q1: Will the Commissioner exercise the discretion under section 118-195 of the 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: Person A passed away on XX XXX 20XX leaving a purported Will dated XX XXX 20XX. The deceased's main residence was situated at Address A and not used to produce income at the time of their death. The land size of the property was less than 2 hectares. The will did not meet the requirements of a valid will under the Wills Act 2008 as it had only been witnessed by one person, Person B. The previous lawyer, Lawyer A, had prepared the Will originally in 20XX and had posted it out for Person A to sign. The document was returned to the lawyer and then stored in their safe custody. The issue of the Will being incorrectly signed was only discovered after Person A's death. Lawyer A was initially instructed to act in relation to the estate, but after multiple contact attempts, and no significant progress by them to prove the Will, the Will was uplifted by Lawyer B in XXX 20XX. As the Will did not meet the requirements of a valid Will due to having no second witness, it was decided the appropriate course of action was to apply to the Supreme Court in the relevant State to dispense with the requirements for execution of wills. Evidence from the witness of the Will or persons present at the signing and any further information from Lawyer A of searches they undertook to prove due execution was relevant for such an application. Obtaining that information proved to be difficult. It took several months to search for Person B's (the only witness who signed the Will) whereabouts. Eventually, Lawyer B was able to get in contact with their widow who advised they were deceased. According to Lawyer A there was a second person who may have been present when the Will was signed, Person A's friend Person C. Person C was unable to give evidence of due execution, with them being very unwell and in aged care with diminished capacity. Lawyer B continued throughout 20XX to prepare a draft application to prove the informal Will, lodged a notice of intention to apply and discussed the matter with the Court, but ultimately were not able to gather enough evidence in their view to support such an application. Given the issues presented above, it was decided in early 20XX that the children of the deceased would apply for Letters of Administration on Intestacy instead of seeking to prove the purported Will. After lodgement of updated notices, Letters of Administration were applied for in XXX 20XX and granted to the Administrators on XX XXX 20XX. The 3 months Testators Family Maintenance claim period expired on XX XXX 20XX. The Dwelling at Address A was listed for sale and was under contract on XX XXX 20XX. The property sale settled on XX XXX 20XX.

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