Private ruling: Deceased estate – corpus paid to beneficiary
Date of advice: 13 December 2017
Published: May 2018
Ruling period: Year ended 30 June xxxx
Date scheme commenced: 01 July xxxx

Ruling: Q1: Is the money received in a foreign currency from the estate of my deceased relative taxable in Australia? | A1: No.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5. | Income Tax Assessment Act 1997 Section 6-10. | Income Tax Assessment Act 1997 Section 6-15. | Income Tax Assessment Act 1936 Section 99B.

Reasons for decision: Summary: Ordinary income Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident includes ordinary income derived directly or indirectly from all sources during the income year. The distribution of the money from the Executors is regarded as a distribution of corpus or capital amount. In your case, the amount is regarded as a distribution of corpus. A distribution of corpus received from a deceased estate is not considered to be ordinary income and therefore not assessable under subsection 6-5(2) of the ITAA 1997. Statutory income Section 6-10 of the ITAA 1997 provides that amounts that are not ordinary income but are included in assessable income by another provision, are called statutory income and are also included in assessable income. Corpus from a deceased estate is not assessable income of a beneficiary (section 99B of the Income Tax Assessment Act 1936 (ITAA 1936)). Furthermore, there are no capital gains tax (CGT) consequences under the CGT provisions in relation to a distribution or entitlement of the corpus of a deceased estate. According to subsection 6-15(1) of the ITAA 1997, if an amount is not ordinary income and is not statutory income, it is not assessable income. This, in turn, means a person does not have to pay income tax on it. In your case, the inheritance money you receive from the deceased estate is neither ordinary income nor statutory income within the above definitions. Therefore, the sum of money bequeathed to you from your relatives estate would not be assessable under subsection 6-5 of the ITAA 1997.

Relevant facts: You are an Australian resident for tax purposes | Your relative passed away. | As a beneficiary of the deceased estate you received money from the estate of your relative. | A bank transfer of foreign currency was deposited from the Executor Account to your Foreign Currency Account.