Private ruling: Deceased estate
Published: September 2014
Ruling period: Year ending 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Is the interest accrued from a deceased estate assessable to you personally? | A1: No.

Relevant facts and circumstances: You are the executrix of a will (the trust). Probate was granted. A house has been sold and the proceeds paid into an interest bearing bank account in your name and will remain there until distribution to the beneficiaries. There is no deceased estate trust Tax File Number.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1936 section 98 | Income Tax Assessment Act 1936 section 97

Reasons for decision: Summary: Where a trust earns assessable income in a financial year, it must be determined who has the obligation to pay tax on that income. The taxation treatment of trust income is contained within Division 6 of the Income Tax Assessment Act 1936 (ITAA 1936). The obligation and rates of tax applicable are dependent upon various factors including: • if any beneficiaries were entitled to receive the income or have the income dealt with on their behalf (present entitlement) • if the beneficiary is under a legal disability, and • the source of the income. Section 97 of the ITAA 1936 states a beneficiary is assessable if the beneficiary is presently entitled to the income of the trust, is not under a legal disability and is a resident at the end of the income year. The trust income is included in the beneficiary's return and taxed at the individual tax rates. In your circumstances the estate has not yet been finalised and therefore the interest in this account is attributable to you as the trustee of the estate and not to you personally.