SA grandma who killed husband with axe avoids jail

A South Australian grandmother who killed her husband with an axe will not serve any prison time after being found not guilty due to mental incompetence that led to hallucinations of dead people in her bedroom.

The Supreme Court found Lucia Colella, 76, was suffering from a depressive disorder with psychotic features when she killed husband Antonio in 2014, the Advertiser reports.

This morning Justice Kevin Nicholson ruled Colella be released into the community on licence, but she will spend the rest of her life under supervision.

The court heard Colella was sleep-deprived from caring for her retired bus driver husband full-time when she stabbed him with a knife and bludgeoned him with an axe.

"She reported visual hallucinations of seeing dead people, some of whom were talking to her but she could not understand what they were saying," a psychiatric report tendered to the court read.

"She felt scared and paranoid by this ... when she goes to sleep she sees things around her, seemingly dead people."

In 2015 Colella told news.com.au that she misses her husband of 50 years "every day".

It is not known where Colella will live.