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This edited version has been archived due to the length of time since original publication.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.

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Edited version of your written advice

Authorisation Number: 1051482920957

Date of advice: 12 February 2019

Ruling

Subject: Capital gains tax

Question

Will any capital gain made by the applicants as executors and trustees of the Estate from the transfer be disregarded under subsection 118-85(1) of the Income Tax Assessment Act 1997 on the basis that it is a transfer of a capital gains tax asset for no consideration to a special disability trust?

Answer

Yes.

Based on the information provided, the Special Disability Trust (SDT) meets the necessary requirements as outlined in the Social Security Act 1991.

As the conditions for the exemption contained in subsection 118-85 of the Income Tax Assessment Act 1997 will also be met, any capital gain made on the transfer of the Property from the Testamentary Trust to the SDT will be disregarded.

This ruling applies for the following period

Year ending 30 June 2019.

The scheme commences on

1 July 2018.

Relevant facts and circumstances

Person X acquired a property (the Property) after 20 September 1985.

Shortly after the Property was acquired it was occupied Person A, who was the child of Person X’s spouse (Person B).

Person X passed away in 20XX and the title of the Property was transferred into Person B’s name.

Person B (the Deceased) passed away after a number of years.

The following information was provided in the Deceased’s will:

The following information was provided in the Schedule of the Deceased’s will:

In 20XX probate on the Deceased’s will was granted.

A request was made for the Department of Human Services (DHS) to assess Person A as a potential beneficiary of a Special Disability Trust (SDT).

The DHS sent a letter to Person Z advising that they had determined that Person A met the beneficiary criteria for a special disability trust under section 1209M of the Social Security Act 1991 (Cth) (SSA).

A Special Disability Trust (the SDT) was created by deed which included the following:

DHS sent a letter to Person Z which advised that they had determined that the SDT met the requirements for an SDT within the meaning of the SSA from the date it was created.

The Property has been transferred from Person B’s name to the Deceased’s estate, being the Testamentary Trust.

The Property will be transferred from the Testamentary Trust to the SDT by way of an in-specie capital distribution for no consideration.

You will transfer the Property from the Testamentary Trust to the SDT during the period covered by this ruling.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 102-5

Income Tax Assessment Act 1997 Section 102-20

Income Tax Assessment Act 1997 Section 104-10

Income Tax Assessment Act 1997 Section 108-5

Income Tax Assessment Act 1997 Section 116-30

Income Tax Assessment Act 1997 Section 118-85

Income Tax Assessment Act 1997 Section 995-1

Social Security Act 1991


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