Private ruling: Deductible expenses of a deceased estate
Date of advice: 14 August 2018
Published: October 2018
Ruling period: Financial year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is the Executor’s commission incurred in gaining or producing assessable income to the Deceased Estate deductible by the Estate in the year it was incurred? | A1: Yes The Executor’s commission incurred in the gaining or producing of assessable income to the Deceased Estate is deductible by the Estate in the year it was incurred under the general deduction provision in section 8-1 of the Income Tax Assessment Act 1997 . The commission expense is considered the Executor’s remuneration and is treated as an expense of the Deceased Estate.

Relevant facts and circumstances: A deceased estate had multiple shareholdings which the Executor was required to sell in order to begin distributing the funds to multiple beneficiaries. As part of the administration of the Estate, the Executor undertook investment activities which involved investing cash into bank accounts (including term deposits) that generated interest income. In the 20XX-20XX financial years, the taxable income of the Estate includes interest income. The Will of the individual provided that twelve parts of the remainder of the Estate was to be paid to the Trustee (Executor) for the exercise of their function as Trustee. The Executor was paid a certain amount of commission in the 20XX-20XX financial year for the exercise their function as the Trustee of the Estate. The total commission expense does not consist of any of those specified in subsection 8-1(2) of the ITAA 1997. The total amount of the commission will be reported as assessable income to the Executor in the Executor’s personal tax return.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1