Private ruling: Deceased Estate - date fully administered - apportionment of income in year of final administration
Published: May 2014
Ruling period: Year ended 30 June 20XX.
Date scheme commenced: 1 July 20XX.

Ruling: Q1: Is the Estate fully administered on the date that assets have been consolidated, debts have been identified and expenses incurred in administrating the Estate have been paid? | A1: Yes. | Q2: Are you as executor of your parent's deceased estate assessable on the income derived by the estate before it is fully administered? | A2: Yes. | Q3: Are the beneficiaries assessable on the income derived by your parent's deceased estate after the estate is full administered? | A3: Yes. | Q4: Will bank records suffice as evidence of when income was derived for the purpose of apportioning income assessable to either the estate or beneficiaries? | A4: Yes.

Relevant facts and circumstances: You are the executor and a beneficiary of the Estate of your late parent. Your parent died sometime during the year ended 30 June 20XX. Probate was granted sometime during the year ended 30 June 20XX. At this time your parent's money was held in various bank accounts and with an aged care facility accommodation bond that would only be released to you as executor of your parents's estate on proof of the Grant of Probate. Following the Grant of Probate, all monies were consolidated into various bank accounts. Interest income has been derived on these monies since your parent's death. This interest income is the only income of your parent's estate. The amount of interest income and when it was credited / paid is easily evidenced by the bank records. An Intention to Distribute Assets (in terms of section 93 of the Succession Act, 2006 (NSW) ) was posted online at the Supreme Court of NSW just after the Grant of Probate. That notice called for anyone with a claim on the estate to make you as executor of your parent's estate aware of their claim with 30 days as the assets of your parent's estate would be distributed 6 months after their death (sometime before 30 June 20XX). Notwithstanding the 30 day requirement under the Act if a claim was made outside this time frame but before distribution date you would still need to consider that claim, as the assets would not have been distributed. No beneficiary is under a legal disability. You intend to distribute assets and net income of your parent's estate on the day 6 months after your parent's date of death. You are seeking to apportion the income of the deceased estate in the income year that it is fully administered so that you as executor of the estate will be assessable on the net income of the estate from the date of death until it is fully administered; and income derived after the date of full administration is assessable to the beneficiaries. The following documents are to be read with and form part of the scheme for the purposes of this private binding ruling: • Probated copy of the will of your late parent, including an inventory of property held by the Estate as at the grant of probate. • Certified copy of the Death Certificate of your late parent. • Notice of intended distribution of estate lodged online with the NSW Supreme Court.

Relevant legislative provisions: Income Tax Assessment Act 1936 , Section 97 | Income Tax Assessment Act 1936 , Section 99 | Income Tax Assessment Act 1936 , Section 99A

Reasons for decision: Summary: Your parent's estate is considered fully administered on the date that assets have been consolidated, debts have been identified and expenses incurred in administrating the Estate have been paid. A deceased estate is fully administered when all of the assets and liabilities have been ascertained and payment or provision for payment of liabilities has been made. | Detailed Reasoning - Question 2 and Question 3: Paragraph 21 of IT 2622 states that the Australian Taxation Office will accept an apportionment of net income received in the year that a deceased estate is fully administered. Therefore you as executor of your parent's deceased estate will be assessable on the income derived by the estate before it is fully administered, from date of death to date of full administration and the beneficiaries will be assessable on any income derived after the date of full administration to 30 June 20XX as they will be presently entitled to that income. | Detailed Reasoning - Question 4: Bank records will suffice as evidence of when income was derived for the purpose of apportioning income assessable to either the estate or beneficiaries. Paragraph 22 of IT 2622 states that apportionment can happen provided there is evidence of the income derived during the separate periods. Bank Statements are evidence, in contrast apportioning on a time basis would not be acceptable.

Reasons for decision: The principles set out in Taxation Ruling No. IT2622 Income tax: Present Entitlement during the stages of administration of deceased estates (IT 2622) have been applied.