Private ruling: Income and deceased estates
Published: November 2012
Ruling period: Year ended 30 June 2009 | Year ended 30 June 2010 | Year ended 30 June 2011 | Year ended 30 June 2012
Date scheme commenced: 19 November 2009

Ruling: Q1: Should the interest earned from the date of judgement to the date of death of the deceased be recorded in the date of death return? | A1: Yes. | Q2: Are the beneficiaries assessable on interest accrued on the judgement debt from the date of death till date of distribution? | A2: No, the income is assessable to the Trustee.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. The arrangement that is the subject of the private ruling is described below. This description is based on the following documents. These documents form part of and are to be read with this description. The relevant documents are: The application for private ruling received Copy of the Probate of the deceased estate The deceased passed away. The deceased has a number of children who are the beneficiaries of the estate. A clause of the Last Will and Testament states: After payment thereout of my just debts funeral and testamentary expense s and death estate and succession duties State or Federal upon the whole of my dutiable and notional estate I give the whole of my estate of whatsoever nature and wheresoever situate to my Trustees upon trust for such of my children as survive me and if more than one in equal shares absolutely provided always that if any of them predeceases me leaving a child or children who shall survive me and attain the age of 18 years such issue shall take and if more than one in equal shares the share in my estate which his her or their parent would have taken had they survived me. One of the assets of the deceased estate was a judgement debt owed to the deceased handed down by a court. Although default judgment was entered against the debtor prior to the death of the deceased no action was taken to enforce the judgment until after the death of the deceased. One of the items listed in the Probate of Will in the inventory of property was an amount being interest on the judgement debt from the date of entry of judgement to the date of death of the deceased. The amount of the judgment debt together with interest accrued on the debt was later recovered. Interest accrued until payment was made to the beneficiaries. There is one asset still remaining in the estate which has not been dealt with and therefore the Trust Estate has not yet been fully administered. This may occur within the next six months as negotiations are being carried out amongst the beneficiaries to deal with that one asset.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 216 | Income Tax Assessment Act 1936 Section 101A

Reasons for decision: Summary: An individual income tax return must normally be filed for a deceased taxpayer in respect of the period from the close of the previous year to the date of death in accordance with Section 216 of the Income Tax Assessment Act 1936 (ITAA 1936). The return is filed by the executor or administrator of the deceased's estate and must include all assessable income derived (and all deductible losses and outgoings incurred) by the deceased in that period up to date of death. A trustee of a deceased estate is generally required to file a trust return for the income derived after death by the deceased estate. The trustee of the estate of a deceased taxpayer is assessed on amounts received after the death of the deceased which would have been assessable to the deceased had they been received during his/her lifetime. Such amounts are deemed to be income to which no beneficiary is presently entitled (Section 101A of the ITAA 1936) and are assessed section 99A of the ITAA 1936.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.