Private ruling: CGT - deceased estates
Date of advice: 4 February 2025
Published: 17 March 2025
Ruling period: Year ending 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Did the property retain its pre-CGT status when it was held in a testamentary trust, and not subject to CGT when it was sold by the legal personal representative for the deceased estate? | A1: Yes.

Relevant facts and circumstances: The deceased acquired the property on XX XXX 19XX. The dwelling is located at Location A (the property). Person A (the deceased) passed away on XX XXX 19XX. The property was purchased for the deceased's child, Person B to reside in. It was their main residence from the date of acquisition until their death. The property was situated on less than two hectares of land. Probate for the deceased's estate was granted on XX XXX 19XX. The Will for the deceased listed 3 executors being the deceased's spouse Person C and two others. The deceased's Will bequeathed the entire estate on trust for Person C, and on their death to the deceased's children. The 3 executors were the trustees of this trust. On XX XXX 19XX the 3 trustees retired in favour of Trustees A who were subsequently registered on the title of the property as sole proprietor on XX XXX 19XX. Person C died on XX XXX 19XX, survived by their 3 children. Clause 6(b) of the deceased's Will, provided that the interests would remain in trust, after Person C's death, for the benefit of the 3 children. The Will gave Person B a right to purchase the property when Person C's life interest ceased. It also provided that if Person B did not exercise their right to purchase the property, the trustees could have the property appropriated to Person B as a beneficiary of the state. Person B did not purchase the property and it remained in the testamentary trust. On XX XXX 20XX Trustees A retired as the trustee and Trustees B were appointed as the new trustee. Trustees B were listed on the title of the property as the sole proprietor. Person B resided in the property until they moved into a nursing home in XXX 20XX. Person B's child moved into the dwelling, serving as a caretaker. At no time has the property being used to produce assessable income and no capital improvements have been undertaken on the property since its acquisition by Person A. On XX XXX 20XX Person B passed away. The property was their principal residence until their death. On XX XXX 20XX the property was sold with settlement occurring on XX XXX 20XX.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 118-195(1).