Private ruling: Capital gains tax and deceased estate - testamentary gift
Ruling period: Year ended 30 June 2011
Date scheme commenced: 1 July 2010

Ruling: Q1: Would the bequest made to a Deductible Gift Recipient (DGR) sub-fund of the beneficiary be deductible under Section 30-15 of the Income Tax Assessment Act 1997 (ITAA 1997) had the bequest not been a testamentary gift? | 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. The deceased died in a previous income year. Probate of the Will was granted in the same income year. The deceased bequeathed capital gains tax (CGT) assets, known as the Collection to entity A. The bequest does not specify a particular fund as the beneficiary. Entity A is a Charitable Institution endorsed to receive tax concessions including an income tax exemption. Entity A is not endorsed as a Deductible Gift Recipient (DGR). Entity A operates four funds: · Entity B; · Entity C; · Entity D; and · Entity E. Entity B and C are registered as DGRs. The bequest did not specify a particular fund as the beneficiary. The purpose of the Entity D is to provide eligible scholarships, bursaries or prizes. The purpose of the Entity E is to provide relief to Indigenous persons for their maintenance, advancement, education or benefit. Entity A has been unable to locate and provide the Executors with copies of any trust deeds or founding documents for the Entity A and B. However, it is understood that these funds are consistent with Taxation Ruling 96/8 and Taxation Ruling 2000/10 as they are endorsed as DGRs . The Will imposes a number of conditions and restrictions on the use of the collection including: · the Collection must be used for the study and advancement of a particular medium (with the exception of the property); · all pieces in the Collection must be retained and may not be disposed of; · the 5/13 th residue of the Estate must be used for the operation, maintenance, security and care of the Collection and to purchase any further pieces; · the Collection must be taken on one country tour each year except where for reasons beyond Entity A's control, it is impractical to do so; · the Collection must be kept together as a whole for display purposes either at the property or an alternative location on or near the Entity A's site; and · if the property is sold, the proceeds of the sale must be used solely for housing, storage, preservation and display of the Collection. The assets forming the collection are pre and post-CGT assets acquired prior to and after 20 September 1985. Real property A is a post-CGT asset. The Collection has been removed from the property and will be distributed to entity A and likely to be dispersed and displayed in existing Entity A buildings. You have provided the following documents to support your ruling application: · a copy of the deceased's Will; · a copy of Entity A's constitution; and · copies of the trust deeds for the Entity D and E.

Relevant legislative provisions: Income Tax Assessment Act 1997 - Section 30-15 and Income Tax Assessment Act 1997- subsection 30-17(2).

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. You may deduct a gift or contribution that is made in the situations set out in the table contained within section 30-15 of the ITAA 1997. It tells you: · who is the recipient of the gift or contribution can be; and · the type of gift or contribution that you can make; and · how much you can deduct for the gift or contribution; and · any special conditions that apply. Subsection 30-15(2) of the ITAA 1997 states that a testamentary gift or contribution is not deductible under this section. In this circumstance, the Collection was bequeathed by the deceased under the provisions of their Will to Entity A. Had the gift been made by the deceased before they died, the gift would have been deductible to the deceased under section 30-15 of the ITAA 1997.

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.