Private ruling: Capital gains tax consequences of the sale of land from unadministered estates
Date of advice: 15 December 2020
Published: February 2021
Ruling period: 1 July 202Y to 30 June 202Z
Date scheme commenced: XX XXXX XXXX

Ruling: Q1: If trustee company A, as the Legal Personal Representative (LPR) of the estate of the deceased individuals, sells any of the land that they owned at the time of their death, will any capital gain or loss be disregarded? | A1: Yes

Relevant facts and circumstances: Trustee company A became the legal personal representative (LPR) of numerous un-administered estates involving several deceased individuals within the same family, when they acquired trustee company B. The deceased died intestate pre-CGT with several children. The deceased's son was granted Letters of Administration in 19AB. The deceased's son also died pre-CGT without completing administration of the estate of his father. Trustee company B was granted Letters of Administration in 19CE. All of the relevant parties died pre-CGT, and their estates remain un-administered. Land acquired by the deceased and their family is registered in the name of trustee company B. Trustee company A is the LPR of the estates of all of the deceased. Trustee company A wishes to wind up the estates by selling the land and distributing the proceeds.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 102-20. | Income Tax Assessment Act 1997 Subsection 104-10(5). | Income Tax Assessment Act 1997 Subsection 128-15(2).

Reasons for decision: Detailed Reasoning - Capital gains tax and deceased estates: Under subsection 128-15(2) of the ITAA 1997, if you acquire a CGT asset owned by a deceased person as their LPR, you are taken to have acquired the CGT asset on the date the person died. If the CGT asset is taken to have been acquired by the LPR before 20 September 1985, it is a pre-CGT asset and you disregard any capital gain or loss you make on the sale of the asset under paragraph 104-10(5)(a) of the ITAA 1997. In this case, the deceased and their relevant family passed away before 20 September 1985. Therefore, the LPR is taken to have acquired the land they each owned on the date each individual died, and the land remains a pre-CGT asset to the LPR. When the LPR of the estate of the deceased sells any of the land that they owned at the time of their death, any capital gain or loss will be disregarded.