Private ruling: Capital gains tax - deceased estate
Date of advice: 29 September 2017
Published: February 2018
Ruling period: Year ended 30 June 2017.
Date scheme commenced: 1 July 2016.

Ruling: Q1: Is any capital gain or capital loss made on the disposal of the property disregarded? | A1: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 subsection 118-130(3) | Income Tax Assessment Act 1997 section 118-195 | Income Tax Assessment Act 1997 subsection 118-195(1)

Reasons for decision: Summary: There are special rules that apply to the disposal of assets inherited through a deceased estate such that, in some circumstances a capital gain or loss on disposal of property can be disregarded (section 118-195 of Income Tax Assessment Act 1997 ). A capital gain or capital loss can be disregarded if: ● the deceased acquired the dwelling prior to 20 September 1985; and ● your ownership interest ends within 2 years of the deceased’s death. | Detailed Reasoning - Application to your situation: The deceased acquired the property as an investment property before 20 September 1985. The trustee sold the property within the two year period and accordingly any capital gain or capital loss will be disregarded.

Relevant facts: The deceased acquired a property prior to 20 September 1985 (the property). | The deceased passed away in 2016 (the deceased). | The property was used to produce assessable income during the deceased’s ownership period. | The deceased did not any make major capital improvements after 20 September 1985. | The property was listed for sale and settlement occurred in 2017.