Private ruling: Capital gains tax and deceased estates
Date of advice: 30 July 2019
Published: October 2019
Ruling period: Year ended 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Is any capital gain made on the disposal of the Property disregarded under section 118-210 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes The Executors acquired the Property in accordance with the will for the occupation by a beneficiary. That beneficiary occupied the dwelling for the entire ownership period. Accordingly, the Estate can disregard any capital gain made on the disposal of the Property under subsection 118-210(3) of the ITAA 1997.

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. At the time of the deceased's death, the deceased owned a vacant block of land, (the Vacant Block). An adjoining property which contained a dwelling, (the Property) was owned by the deceased's child, X. A lease was registered to the deceased and their spouse. The deceased's will provided a life interest in their estate to their spouse. X had a subsequent life interest in the estate, with the deceased's grandchildren holding the remainder interest in the estate. The will states that the Executors shall have the following powers: · To apply for the maintenance education or benefit of any minor beneficiary as my Executors think fit the whole of any part of the capital or that part of my Estate to which that Beneficiary is entitled or may in future be entitled. · To invest and change investments freely as if they were beneficially entitled and this power includes the right to invest in unsecured interest free loans or other non-income producing assets including property for occupation or use by a beneficiary. · To determine whether receipts or outgoings are of a capital or income or partly of a capital and income nature so as to bind the beneficiary. · To sell lease exchange or otherwise dispose of assets in my estate on such terms are they consider expedient as though they were used. The Executors of the estate acquired the Property from X. The deceased, their spouse and X all lived in the dwelling on the Property. Following the deceased's death the deceased's spouse and X continued to live in the dwelling. The deceased's spouse passed away. X moved to a nursing home after the sale of the Property. The Vacant Block was sold and the resulting capital gain was accounted for in the estate's relevant tax return. The Property was later sold.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 118-210