Private ruling: CGT - deceased estates - 2 year discretion
Date of advice: 19 February 2026
Published: 7 April 2026
Ruling period: Year ending 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Will the Commissioner exercise the discretion under section 118-195 of the 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 of the property? | A1: Yes.

Relevant facts and circumstances: The deceased purchased the property at XX XXX XXX before 20 September 1985. The dwelling was the deceased's main residence and never used to produce income. The deceased's spouse had passed away in MM 20YY. The deceased had three children. One of the deceased's children resided at the property with their parents from 20YY. They did not pay rent or board. The deceased moved into residential care in mid-20YY. The deceased passed away on DD MM 20YY. The deceased's will appoints two of their children as executors (Executor A and Executor B). The executors are also joint residuary beneficiaries under the will. A dispute arose between the executors regarding assets of the estate and their distribution. In MM 20YY Executor A lodged a caveat on the estate. In MM 20YY Executor B sought legal advice regarding the estate. In MM 20YY legal representation for Executor A advised that the property needed to be sold and Executor B could not remain in the property rent free. In MM, MM and MM of 20YY legal representation for each of the executors exchanged correspondence seeking agreement on a proposal regarding application for a grant of probate and contingent assets of the estate and the possibility of caveat(s) being lodged by either, or both, Executor B and a third sibling. Between MM 20YY and MM 20YY legal representation for both parties examined and sought clarification on amounts credited to each of the siblings and whether they were from the estate's funds or a distribution from an inheritance received prior to the deceased's death from an overseas relative. In MM 20YY legal representation for Executor B wrote expressing the necessity for agreement to the proposal regarding probate arrangements and contingent assets. This proposal was reiterated in MM 20YY. In MM 20YY legal representation for Executor B requested agreement by Executor A to an amended statement of the estate's assets and liabilities and a certified copy of the deceased's will, thereby allowing the estate to proceed to an application of Grant of Probate in both executor's names The estate's assets and liabilities were agreed on DD MM 20YY, and included a loan made by the deceased to Executor A to the value of $xxx,xxx. Probate was granted on DD MM 20YY to both executors. On DD MM 20YY the third sibling sought legal remedy of a claim on the estate through proceedings at the Supreme Court. On the same date Executor B lodged an interlocutory application as joinder as an additional claimant on the estate. On DD MM 20YY an order was issued by the Supreme Court determining that the property is to be sold and commensurate distributions from the residuary of the estate be made to the beneficiaries. In MM 20YY a real estate agency agreement was signed and the property listed for sale on DD MM 20YY. The property was later withdrawn from sale due to a disagreement between Executor B and the listing agent. In MM 20YY a new agency agreement was signed with an alternate real estate and listed for sale on DD MM 20YY. There were no renovations or building improvements undertaken on the property. The property was sold by the executors on DD MM 20YY with settlement occurring on DD MM 20YY.

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