Private ruling: Payments received from a deceased estate
Published: July 2013
Ruling period: Year ended 30 June 2012 | Year ending 30 June 2013 | Year ending 30 June 2014 | Year ending 30 June 2015 | Year ending 30 June 2016
Date scheme commenced: 1 July 2011

Ruling: Q1: Are the amounts that you receive from your sibling assessable income? | A1: No.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are a beneficiary of a deceased estate. The deceased's widow is the executor of the estate and the main beneficiaries of the estate are the deceased's widow and one of your siblings. The deceased's Will provided that you receive a specified amount when you reach a certain age. The deceased's Will did not provide that you should receive any income including interest from any amounts invested by the estate. The estate has invested money in a term deposit which pays interest annually. The interest earned is then paid to the deceased's widow and your sibling on an equal basis (50% each). The deceased's widow retains their share of the interest. Your sibling pays their share to you. The deceased's widow (as the executor) determined that, based on the Will, you were only to receive the specified amount on attaining a certain age. Independent legal advice confirms that you are to receive only the amount specified on and that interest will not be payable on the amount until you reach a certain age.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 97.

Reasons for decision: Summary: A beneficiary that is presently entitled to income from a trust will need to include any interest that they receive from the estate in their assessable income. In your situation, you are not presently entitled to income from the estate. The Will stipulates that you are entitled to a specified amount when you attain a certain age. It does not make provision for you to receive any other income from the estate. The amounts that you are receiving are not actually interest that has been paid to you by the estate. They are amounts of interest that the estate has paid to another beneficiary, your sibling, who has then given the amounts to you. It is therefore considered that these amounts are gifts that have been paid to you by your sibling. As these amounts have been gifted to you, you are not required to include them as assessable income in your income tax returns.