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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of private ruling

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Ruling

Subject : Capital gains tax - deceased estate

Question and Answer

Is the property held by the estate exempt from capital gains tax (CGT)?

Yes.

This ruling applies for the following period

1 July 2004 to 30 June 2009

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.

In xx the taxpayer purchased a property

In or around xx the taxpayer moved into the property, after he renovated it.

In or around xx the taxpayer moved overseas to X for work with an offshore drilling company.

The taxpayer continued to elect the property as his main residence.

The taxpayer rented a house in X, there was no lease and the partner also lived in the house.

The taxpayer used the house in X for short periods of time away from work.

Between xx and xx the taxpayer returned to Australia two or three times a year and stayed at the Australian property for up to two weeks.

On xx the taxpayer leased the property.

Since xx the property has been consistently leased.

After the property was leased the taxpayer continued to travel back to Australia and stayed with family members.

The taxpayer continued to elect the property as a main residence.

On xx the taxpayer passed away.

The taxpayer intention is for the property not to be sold and for it to be transferred to relatives as the beneficiaries of the Will.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 102-20

Income Tax Assessment Act 1997 Section 104-10

Income Tax Assessment Act 1997 Section 118-145

Income Tax Assessment Act 1997 Subsection118-145(1)

Income Tax Assessment Act 1997 Subsection 118-145(2)

Income Tax Assessment Act 1997 Section 118-195

Income Tax Assessment Act 1997 Section 128-10

Income Tax Assessment Act 1997 Subsection 128-15(3)

Reason for Decision

You make a capital gain or capital loss if and only if a CGT event happens (section 102-20 of the Income Tax Assessment Act 1997 (ITAA 1997).

Section 104-10 of the ITAA 1997 specifies that a CGT event A1 happens if you dispose of a CGT asset. You dispose of a CGT asset if a change of ownership occurs from you to another entity, whether because of some act or event or by operation of law.

Under subsection 128-15(3) of the ITAA 1997 it states;

Any capital gain or capital loss the legal personal representative makes if the asset passes to a beneficiary in your estate is disregarded.

Therefore; as the asset will pass to beneficiaries, the estate can disregard any capital gain.

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