Private ruling: Capital gains tax
Published: July 2014
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: A1: Yes.

Relevant facts and circumstances: One of your grandparents acquired a property before 20 September 1985. On the death of your grandparent, the full ownership interest in the property passed to your other grandparent under the will. No application for probate of the Will was made at the time. One of your parents subsequently acquired an interest in the property which was passed on to your other parent before 20 September 1985. You acquired an ownership interest in the property after 20 September 1985 following the death of your remaining parent. No application for probate of your grandparent's Will was ever made and the estate was never administered. The property title remained in your grandparent's name until recently when the title was transferred to you and other family members who had an ownership interest in the property. The property was sold within two years of you acquiring your ownership interest.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-195.

Reasons for decision: Summary: A capital gain or capital loss is disregarded under section 118-195 of the ITAA 1997 where a capital gains tax event happens to your ownership interest in a dwelling, and the interest passed to you as a beneficiary in a deceased estate, if: • the deceased acquired the ownership interest before 20 September 1985, and • your ownership interest ends within two years of the deceased's death. In your case, the deceased acquired the ownership interest before 20 September 1985, the ownership interest passed to you as beneficiary in the deceased estate, and you disposed of your interest within two years of the deceased's death. Therefore, any capital gain or loss you make from selling the property will be disregarded. The fact that the property title record was left unattended and remained under your grandparent's name does not affect the effective transfer of beneficial ownership interest in the property throughout the whole period after your grandparent's death.

Question and answer: Will a capital gain or loss you make from the disposal of your ownership interest in the property be disregarded under the Income Tax Assessment Act 1997 (ITAA 1997)?