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This edited version has been archived due to the length of time since original publication.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

Authorisation Number: 1011775035170

This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

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Ruling

Subject: Capital gains tax and deceased estate - testamentary gift

Question

Would the bequest made to a Deductible Gift Recipient (DGR) sub-fund of the beneficiary be deductible under Section 30-15 of the Income Tax Assessment Act 1997 (ITAA 1997) had the bequest not been a testamentary gift?

Answer:

Yes.

This ruling applies for the following period:

Year ended 30 June 2011

The scheme commences on:

1 July 2010

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.

The deceased died in a previous income year. Probate of the Will was granted in the same income year.

The deceased bequeathed capital gains tax (CGT) assets, known as the Collection to entity A. The bequest does not specify a particular fund as the beneficiary.

Entity A is a Charitable Institution endorsed to receive tax concessions including an income tax exemption. Entity A is not endorsed as a Deductible Gift Recipient (DGR).

Entity A operates four funds:

    · Entity B;

    · Entity C;

    · Entity D; and

    · Entity E.

Entity B and C are registered as DGRs.

The bequest did not specify a particular fund as the beneficiary.

The purpose of the Entity D is to provide eligible scholarships, bursaries or prizes.

The purpose of the Entity E is to provide relief to Indigenous persons for their maintenance, advancement, education or benefit.

Entity A has been unable to locate and provide the Executors with copies of any trust deeds or founding documents for the Entity A and B. However, it is understood that these funds are consistent with Taxation Ruling 96/8 and Taxation Ruling 2000/10 as they are endorsed as DGRs .

The Will imposes a number of conditions and restrictions on the use of the collection including:

    · the Collection must be used for the study and advancement of a particular medium (with the exception of the property);

    · all pieces in the Collection must be retained and may not be disposed of;

    · the 5/13th residue of the Estate must be used for the operation, maintenance, security and care of the Collection and to purchase any further pieces;

    · the Collection must be taken on one country tour each year except where for reasons beyond Entity A's control, it is impractical to do so;

    · the Collection must be kept together as a whole for display purposes either at the property or an alternative location on or near the Entity A's site; and

    · if the property is sold, the proceeds of the sale must be used solely for housing, storage, preservation and display of the Collection.

The assets forming the collection are pre and post-CGT assets acquired prior to and after 20 September 1985.

Real property A is a post-CGT asset.

The Collection has been removed from the property and will be distributed to entity A and likely to be dispersed and displayed in existing Entity A buildings.

You have provided the following documents to support your ruling application:

    · a copy of the deceased's Will;

    · a copy of Entity A's constitution; and

    · copies of the trust deeds for the Entity D and E.

Relevant legislative provisions

Income Tax Assessment Act 1997 - Section 30-15 and
Income Tax Assessment Act 1997- subsection 30-17(2).

Reasons for decision

While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.

You may deduct a gift or contribution that is made in the situations set out in the table contained within section 30-15 of the ITAA 1997. It tells you:

    · who is the recipient of the gift or contribution can be; and

    · the type of gift or contribution that you can make; and

    · how much you can deduct for the gift or contribution; and

    · any special conditions that apply.

Subsection 30-15(2) of the ITAA 1997 states that a testamentary gift or contribution is not deductible under this section.

In this circumstance, the Collection was bequeathed by the deceased under the provisions of their Will to Entity A. Had the gift been made by the deceased before they died, the gift would have been deductible to the deceased under section 30-15 of the ITAA 1997.


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