Private ruling: Capital gains
Date of advice: 8 November 2018
Published: March 2019
Ruling period: Year ending 30 June 20XX
Date scheme commenced: XX June 20XX

Ruling: Q1: Is the trustee assessable on any capital gain resulting from the disposal of the property? | A1: No We accept that the administration of the estate was completed prior to 30 June 20XX and as a result, in accordance with the principles contained in Taxation Ruling IT 2622, the beneficiaries were presently entitled to the income of the trust. Therefore the trustee will not be assessed on any capital gain resulting from the disposal of the property. Further information on when a beneficiary is presently entitled can be found by searching ‘QC 40484’ on ato.gov.au .

Relevant facts and circumstances: The property was acquired by the deceased before 20 September 1985. The Will requested the trustee to provide the farming property to be devised to an agricultural college that would retain the property as a working property for its students. It required for the Trustees to be totally satisfied that the property would be retained by the selected institution in perpetuity and not be sold after a period of years elapsing. The Trustees were unable to be satisfied that the property would not be sold and determined in late 201X that the property would not be transferred to an agricultural college. The Will then instructed the Trustees to sell the property and distribute the proceeds of the property to the listed beneficiaries should no suitable agricultural college be found. The property was settled on XX June 20XX. The sale incurred expenses of $XX and the estate calculated a net capital gain of $XX on the sale of the property in 20XX financial year. Prior to 30 June 20XX, all other assets of the estate had been redeemed; all debts of the estate had been paid or provided for, all legacies and bequests paid and interim distributions made. The timeframe for claims in relation to family provisions had also elapsed. You sent the cheques to the beneficiaries and wrote to them notifying of their entitlement within 2 months of the end of the income year of which the entitlement became due.

Relevant legislative provisions: Income Tax Assessment Act 1936 Division 6 of Part III | Income Tax Assessment Act 1936 Section 95 | Income Tax Assessment Act 1936 Section 97 | Income Tax Assessment Act 1936 Section 100AA | Income Tax Assessment Act 1997 Section 102-20 | Income Tax Assessment Act 1997 Section 104-5 | Income Tax Assessment Act 1997 Section 104-10