Private ruling: CGT Testamentary trust - shares
Date of advice: 2 January 2020
Published: March 2020
Ruling period: Year ending 30 June 2020
Date scheme commenced: 1 July 2019

Ruling: Q1: Will the Commissioner treat the Trustee s in the same way as a legal personal representative (LPR) in relation to section 128-15(3) of the Income Tax Assessment Act 1997 ? | A1: Yes. PS LA 2003/12 confirms that the Testamentary Trustees will be treated in the same way as a LPR for the purposes of Division 128. | Q2: Will the Commissioner, disregard the capital gain on the transfer of shares from the Estate to a testamentary trust that is going to be established? | A2: Yes. Generally, any capital gain or capital loss from a CGT event that results for an asset owned by a person just before their death is disregarded. Law Administration Practice Statement PS LA 2003/12 confirms that: ...the Commissioner will not depart from the ATO's long-standing administrative practice of treating the trustee of a testamentary trust in the same way that a legal personal representative is treated for the purposes of Division 128 of the Income Tax Assessment Act 1997 (ITAA 1997). For PS LA 2003/12 to apply, the trust in question must be a testamentary trust. In the present case, the trusts are testamentary trusts as they were created under the terms of the Will. Therefore any capital gain or loss made on the transfers of the shares to the Testamentary Trusts will be disregarded under subsection 128-15(3) of the ITAA 1997.

Relevant facts and circumstances: Person B is the executor of the estate (Estate) of the late Individual (The Deceased). The Deceased died recently leaving a will. Cash and shares form part of the residuary of the Estate. The relevant assets which fell within the residuary of Deceased's estate were acquired by the Deceased after 19 September 1985 and transferred to the Estate at the time of the Deceased's death. Notably the relevant assets include listed shares with a value of $X,XXX,XXX (the share portfolio). Pursuant to the instructions from the solicitors and in the will a separate testamentary trust (Testamentary Trusts) will be established and there will be a transfer of the Shares from the Estate into these Testamentary Trusts. The details of the Testamentary Trust are:- · The trustee is Person A. · The beneficiaries are Person A and Person B. · The transfer will be completed XXXX.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 128-10 | Income Tax Assessment Act 1997 section 128-15 | Income Tax Assessment Act 1997 section 128-20