Private ruling: Income tax – main residence exemption
Date of advice: 3 October 2018
Published: November 2018
Ruling period: Year ended 30 June 2018 | Year ending 30 June 2019
Date scheme commenced: 1 July 2017

Ruling: Q1: Does the ownership interest in the dwelling, including the ownership interest of the bare trust whereby you hold the dwelling as bare trustees for the deceased and for the purposes of the main residence exemption pursuant to section 118-195 of the ITAA 1997? | A1: Yes. It is considered that the deceased had a vested, indefeasible and absolute entitlement to the property against the trustee of the bare trust. Section 106-50 of the ITAA 1997 will apply to treat any act done by the trustee as done by the beneficiary. In this circumstance the sale of the property will be treated as though the deceased estate sold the property. For the purposes of the CGT provisions the trustee can disregard any gain or loss made on the disposal of the property under section 118-195 of the ITAA 1997.

Relevant facts and circumstances: The deceased purchased the property before 20 September 1985. It was purchased for $XX. In mid 19XX the title of the property was transferred from the deceased to be registered in the name of Child A and Child B as trustees for the deceased. A declaration of trust was executed and signed by the deceased and the trustees. The declaration states that the property will be held by Child A and Child B as trustees for the deceased. The declaration also stated that the trustees will act in accordance with the deceased’s wishes when dealing with the property. The deceased paid the full purchase price for the property and all costs associated with the upkeep of the property. The property was the deceased’s main residence until he/she died. The deceased died in early 20XX. The property was at auction in mid 20XX for $XX. The property settled in late 20XX.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 102-20 | Income Tax Assessment Act 1997 Section 104-10 | Income Tax Assessment Act 1997 Section 106-50 | Income Tax Assessment Act 1997 Section 118-195 | Income Tax Assessment Act 1997 Section 128-10 | Income Tax Assessment Act 1997 Section 128-15