Private ruling: Trust – deceased estate – Commissioner’s discretion - EOT to make a choice and section 99
Date of advice: 10 April 2019
Published: May 2019
Ruling period: Year ended 30 June 2018
Date scheme commenced: 1 July 2019

Ruling: Q1: Will the Commissioner allow an extension to the two month period under subsection 115-230(5) of the Income Tax Assessment Act 1997 (ITAA 1997) for making a choice to be specifically entitled to a capital gain until XX May 20XX? | A1: Yes Having considered your circumstances and the relevant facts, the Commissioner is able to apply the discretion under subsection 115-230(5) and extend the 2 month time period to make a choice until XX May 20XX. | Q2: Will the Commissioner exercise the discretion not to apply the provisions of section 99A of the Income Tax Assessment Act 1936 (ITAA 1936) and assess the trust under section 99 of the ITAA 1936? | A2: Yes Having considered your circumstances and the relevant facts, it would be reasonable for the Commissioner to apply the discretion to allow section 99 of the ITAA 1936 to apply.

Relevant facts and circumstances: The deceased died on XX October 20XX. A trust was established under the terms of the deceased’s will. The Trustee of the trust is a resident in Australia. The deceased’s spouse has a life interest under the deceased’s will which entitles the spouse to the income derived from one half of the corpus of the trust. During the 20XX-XX income year, the Trustee disposed of shares which resulted in a capital gain. The proceeds from the sale of the shares were applied to the acquisition of other shares by the Trustee. On XX March 20XX Supreme Court proceedings were brought against the Trustee by the spouse as to whether the trust should be assessed on the capital gain made from the disposal of the shares. On XX September 20XX, S, a solicitor, was appointed as Trustee of the trust created under the will to determine who should be assessed on the capital gain. The spouse obtained advice on XX November 20XX and subsequently the appointed solicitor sought a second opinion on XX December 20XX. Both the original advice and the second opinion support the proposition that the Trustee of the Estate should be assessed on the capital gains from the disposal of the shares. The Trustee wants to make the choice under section 115-230 to be assessed on the capital gain from the disposal of the shares in the 20XX-XX income year.

Relevant legislative provisions: Income Tax Assessment Act 1936 section 99 | Income Tax Assessment Act 1936 section 99A | Income Tax Assessment Act 1997 subsection 115-230(5)