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Edited version of your written advice
Authorisation Number: 1012813668338
Ruling
Subject: Capital Gains Tax
Question 1
Is the executor of the estate required to include an amount in the net income of the trust estate under Division 6 of the Income Tax Assessment Act 1936 (ITAA 1936) by way of a capital gain in respect of the disposal of the property?
Answer
No.
Question 2
Do the costs of the rates, water services charges, maintenance associated with the property and costs of the administration of the estate form part of the cost base of the estate property?
Answer
Not Applicable.
Question 3
Are the beneficiaries required to include an amount in their assessable income under section 97 of the ITAA 1936 in respect of the sale of the property?
Answer
Not Applicable.
Question 4
Will any capital gain made be discounted under Division 115 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Not Applicable.
This ruling applies for the following period
Year ended 30 June 2014
The scheme commences on
1 July 2013
Relevant facts and circumstances
The Deceased died on XXXX.
Probate was granted on XXXX.
The Deceased and their relative purchased the property during XXXX.
The Deceased and their relative have lived in the property at all material times as their main residence.
The Deceased's relative died on the XXXX.
The property was registered in the sole name of the deceased.
The Deceased continued to live in the property until they required specialised care.
The Deceased was admitted to hospital and then transferred to a rehabilitation centre.
The Deceased returned home to the property after some time in the rehabilitation centre.
Whilst at home, the deceased fell and broke their bone.
The Deceased had surgery and then was discharged from hospital and returned home to the property.
The Deceased suffered cognitive impairment requiring fulltime care.
The Deceased's relative became the Deceased's fulltime carer.
The Deceased was diagnosed with a medical condition.
The Deceased's relative arranged for the Deceased to be admitted to a Respite Centre.
The Deceased was admitted temporarily into the Respite Centre spending a few days at the Centre and returning to the property from time to time.
The Deceased was reluctant to remain in the Respite Centre for any period of time and consequently, the Deceased returned home from time to time.
The Deceased's relative arranged for the Deceased to be admitted to an Aged Care facility.
The Deceased continued to remain at the Aged Care Facility on average for a number of days.
The Deceased's relative would take the Deceased back to the property where they would stay for numerous days.
The Deceased continued with the arrangement for several months until their death.
The Deceased died on XXXX.
The property was sold on the XXXX and settled on the XXXX.
The Deceased always retained their personal belongings in the property.
The property remained the Deceased's address to which all of their mail was delivered.
The Deceased had at no time let the property to any party and the property was at no stage ever used to produce assessable income.
Relevant legislative provisions
Income Tax Assessment Act 1997 subsection 118-195(1)
Income Tax Assessment Act 1997 section 118-195
Reasons for decision
As per subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997), a capital gain or capital loss you make from a capital gains tax (CGT) event that happens in relation to a dwelling, or your ownership interest in it, is disregarded if:
(a) you are an individual and the interest passed to you as a beneficiary in a deceased estate, or you owned it as the trustee of a deceased estate; and
(b) at least one of the items in column 2 and at least one of the items in column 3 of the table are satisfied.
Beneficiary or trustee of deceased estate acquiring interest | |||
Item |
One of these items is satisfied |
And also one of these items | |
1 |
the deceased *acquired the *ownership interest on or after 20 September 1985 and the *dwelling was the deceased's main residence just before the deceased's death and was not then being used for the *purpose of producing assessable income |
your *ownership interest ends within 2 years of the deceased's death, or within a longer period allowed by the Commissioner | |
........... | |||
2 |
the deceased *acquired the *ownership interest before 20 September 1985 |
the *dwelling was, from the deceased's death until your *ownership interest ends, the main residence of one or more of: | |
|
|
(a) |
the spouse of the deceased immediately before the death (except a spouse who was living permanently separately and apart from the deceased); or |
|
|
(b) |
an individual who had a right to occupy the dwelling under the deceased's will; or |
|
|
(c) |
if the *CGT event was brought about by the individual to whom the *ownership interest *passed as a beneficiary - that individual |
Application to your circumstances
In this case, the Deceased acquired the property after the 20 September 1985 and the dwelling was the Deceased's main residence just before the Deceased's death. The property was never used to produce income and was sold within two years of the Deceased's death. Accordingly, subsection 118-195(1) of the ITAA 1997 has been satisfied and therefore any capital gain or loss made on the property can be disregarded.
As any capital gain or loss made on the property can be disregarded there is no requirement to calculate the net capital gain or determine who would be assessed.
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