Private ruling: Assessable income
Date of advice: 6 April 2016
Published: May 2016
Ruling period: Year ended 30 June 2016
Date scheme commenced: Year ended 30 June 2016

Ruling: Q1: Is the amount received for unused annual leave of the deceased included in your assessable income? | A1: No. | Q2: Is the amount received for unused long service leave of the deceased included in your assessable income? | A2: No.

Relevant facts and circumstances: At the time of the deceased's death they were entitled to unused annual leave and unused long service leave from their employers. The unused leave amounts were paid into the bank account of the deceased estate.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 101A(1) | Income Tax Assessment Act 1936 Subsection 101A(2)

Reasons for decision: Summary: Subsection 101A(1) of the Income Tax Assessment Act 1936 (ITAA 1936), requires the trustee of a deceased estate to include in the assessable income of the trust estate any amounts that are received after the death of the deceased, where such amounts would have been assessable income in the hands of the deceased person if they had received the amounts during their lifetime. Such income is to be included in the assessable income of the trust estate in the income year in which the amounts are received, and the amounts are deemed to be income to which no beneficiary is presently entitled. However, in accordance with subsection 101A(2) ITAA 1936, subsection 101A(1) of the ITAA 1936 does not apply to an amount received by the trustee of a deceased estate where that amount represents a lump sum payment for unused annual or long service leave that would have been included in the assessable to the deceased under section 83-10 or 83-80 of the Income Tax Assessment Act 1997 if they had received it during their lifetime. In this case, the deceased was entitled to annual leave and long service leave amounts that were unused at the time of their death. The unused annual leave and long service leave was paid to the trustee of the estate after the death of the deceased. These amounts would have been included in the assessable income of the deceased had they received it during their lifetime. Therefore, the lump sum payment for unused long service leave and annual leave received by the trustee of the estate will not be included in the assessable income of the deceased estate under subsection 101A(2) of the ITAA 1936.