Private ruling: Capital gains tax - deceased estate - life interest and disposal of dwelling
Published: August 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Is any capital gain or capital loss made on the disposal of the dwelling, disregarded? | A1: Yes.

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. Prior to 1985 a residential property (the property) passed to the deceased from a deceased estate. The deceased died in 2006. The deceased's children are the beneficiaries of the deceased's estate. The deceased's children are the trustees of the estate. Child A has occupied the property as their main residence at all times and they continued to reside there until its recent disposal. Under the deceased's will child A has the right to reside in the property for as long as they wish provided they adhere to the conditions set out in the deceased's will. As trustees of the deceased estate you disposed of the property in the relevant income tax year.


Reasons for decision: Summary: While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision. A capital gain made from a capital gains tax (CGT) event occurring in relation to a deceased's dwelling is disregarded if the interest passes to you as trustee of a deceased estate, provided certain conditions in subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) are satisfied. For the dwelling to be fully exempt it must be either disposed of within two years of the deceased's death or from the time of the deceased's death until your ownership interest ends, one or more of the following occupy the dwelling as their main residence: · the spouse of the deceased immediately before the death (except a spouse who is living permanently separated and apart from the deceased); or · an individual who had a right to occupy the dwelling under the deceased's will (life interest). An individual would be considered to occupy a dwelling under the deceased's will if it was in accordance with the terms of the will. Provided they occupy the property as their main residence from the deceased death until the property is disposed of, the capital gain or capital loss made on the disposal of the property by the trustees is disregarded. In this case, the beneficiary with the right to occupy resided in the property until the date of settlement. Therefore, as the conditions in section 118-195 of the ITAA 1997 have been met, any capital gain or capital loss made on the disposal of the property is disregarded.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.