Private ruling: Deductibility
Date of advice: 2 March 2026
Published: 28 April 2026
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Can the Trustee of the Bankrupt estate claim a deduction for his own and his staff's remuneration for general administration of the estate and for the sale of the bankrupt's property? | A1: Yes. Remuneration costs for ongoing, recurrent, day-to-day administration of the bankrupt estate and for the sale of the bankrupt's property are revenue expenses and are deductible against the estate's income. These costs cannot be included in the cost base of the property.

Relevant facts and circumstances: At some time after 1985, the Bankrupt, a non-resident of Australia, purchased the Property. Later, the Federal Court appointed the Trustee as trustee in bankruptcy for the Bankrupt (the Bankrupt Estate). The Bankrupt failed to pay required levies to the Property's body corporate. The body corporate proceeded to initiate legal proceedings against the Bankrupt to recover their debt, which caused their bankruptcy. Later, the Trustee entered into a contract to sell the Property, and the sale settled. On various dates during the administration period, the Trustee incurred expenses for their own and their staff's remuneration costs for protecting, preserving, and realising the property, as well as administering the Bankrupt Estate.

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