Private ruling: Capital gains tax - deceased estate - remainder interest
Ruling period: Year ending 30 June 2011
Date scheme commenced: 1 July 2010

Ruling: Q1: Is any net capital gain or capital loss made calculated on the market value of the commercial property on the date of your parent's death which occurred after 30 June 1999? | A1: Yes.



Reasons for decision: Summary: The terms of your parent's will create two things in respect to the commercial property: A life interest is created in favour of your other parent. A remainder interest is created in favour of yourself. This means that although your other parent is entitled to income from the property during their lifetime, the ownership of the asset rests with you. An asset owned by a deceased is effectively taken to have been acquired by a remainderman on the date of death of the deceased. You are then taken to have acquired the commercial property as at the date of your parent's death, not when the asset was transferred into your name. As the asset was built by the deceased prior to September 1985 your cost base for the asset will be calculated from the time you are taken to have acquired the asset as at the date of your parent's death, and will be the market value of the asset at that time. As you are taken to have acquired the asset in after 30 June, 1999, and you are an individual, you can use the discount method when calculating any net capital gain.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns. | Relevant facts: You parent built a commercial building sometime before 20 September, 1985. | Your parent died sometime after 30 June 1999. In their will your parent bequeathed the commercial property to their trustee, with any income from the property assigned to your other parent for their lifetime. After the death of your other parent the property would pass to you. | Your other parent died several years later. The property was then transferred to you. | You then sold the property. | Relevant legislative provisions: Income Tax Assessment Act 1997 Section 102-5 Income Tax Assessment Act 1997 Section 104-5 Income Tax Assessment Act 1997 Section 104-10 Income Tax Assessment Act 1997 Section 104-95 Income Tax Assessment Act 1997 Section 115-10 Income Tax Assessment Act 1997 Section 115-15 Income Tax Assessment Act 1997 Section 115-25 Income Tax Assessment Act 1997 Subsection115-100(a) Income Tax Assessment Act 1997 Section 116-20 Income Tax Assessment Act 1997 Section 116-30 Income Tax Assessment Act 1997 Subsection 128-15(2) Income Tax Assessment Act 1997 Section 128-20 Reasons for decision