Private ruling: Capital gains tax
Date of advice: 7 August 2019
Published: October 2019
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Does the estate have an ownership interest in relation to the dwelling for capital gains tax purposes? | A1: No


Relevant legislative provisions: Income Tax Assessment Act 1997 section 102-5 | Income Tax Assessment Act 1997 section 106-50 | Income Tax Assessment Act 1997 subsection 100-25(1) | Income Tax Assessment Act 1997 subsection 118-130(3) | Income Tax Assessment Act 1997 section 118-195 | Income Tax Assessment Act 1997 subsection 128-20(1)

Reasons for decision: Summary: A CGT asset owned by a deceased person at the time of their death passes to a beneficiary of the deceased's estate if the beneficiary becomes the owner of the asset under the will or in one of the other ways set out in subsection 128-20(1) of the Income Tax Assessment Act 1997 (ITAA 1997). An asset will 'pass' to the beneficiary of a deceased estate when the beneficiary becomes absolutely entitled to the asset as against the estate's trustee. A beneficiary becomes absolutely entitled to an asset under a will once the administration of the estate is complete, that is, when the assets of the estate have been called in and the deceased's debts and liabilities have been paid. Therefore, in a subsequent sale of the property, any CGT issues that may arise are a matter for the beneficiary and not the deceased's estate.

Relevant facts: The deceased acquired a dwelling (The dwelling) | The dwelling was the main residence of the deceased. | The dwelling was never used to produce assessable income. | The deceased passed away in 20xx. | The deceased was survived by their child (A) | The deceased named A as their executor. | A was the sole beneficiary of the estate of the deceased. | A was declared bankrupt on in 20xx and was not discharged from bankruptcy until 20xx. | A did not take any steps to administer the estate of the deceased. | The dwelling had a caveat lodged on the title by the trustees of A's bankrupt estate. | In 20xx the trustees requested an organisation to administer the deceased estate. | Probate was granted to the organisation in 20xx. | The caveat was removed and the dwelling was prepared for sale. | Title to the dwelling remained in the name of the deceased. | The dwelling was sold in 20xx and settlement occurred in 20xx.