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Ruling
Subject: CGT - deceased estate
Question and answer
Can you disregard any capital gain or capital loss made on the sale of the property?
No.
This ruling applies for the following periods:
Year ended 30 June 2011
The scheme commenced on:
1 July 2010
Relevant facts and circumstances
The deceased died a number of years ago.
The property was used for grazing.
There was no dwelling or any other building on the property.
The property was more than 2 hectares.
The property was purchased a number of years ago.
No crops were grown on the property.
Two of the deceased's relatives used the property to graze sheep prior to the deceased's death and after their death.
A decision was made to sell the property about a year after the deceased died.
The property was eventually sold.
Relevant legislative provisions:
Income Tax Assessment Act 1997 Subsection 118-195(1).
Reasons for decision
Subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) states that if you are an individual who owns a dwelling in a capacity as trustee of a deceased estate, then you are exempt from tax on any capital gain made on the disposal of the property acquired by the deceased after 20 September 1985 if:
· the property was the deceased's main residence just prior to their death
· it was not being used to produce assessable income at this time, and
Your ownership interest ends within 2 years of the deceased's death (the Commissioner has discretion to extend this period in certain circumstances).
You have an ownership interest in a property if you have a legal interest in the property. This means that if you sell a property, your ownership interest continues until the date of settlement (rather than the date the contract of sale is signed).
The property was purchased by the deceased a number of years ago.
There was no dwelling or any other building on the property.
The property was used for grazing.
The property was used by relatives.
The property was finally sold.
The discretion under Subsection 118-195(1) of the ITAA 1997 is not available to you as there was no dwelling on the land and therefore was not the deceased's main residence just prior to their death.
Any capital gain or loss made on the sale of the property will not be disregarded and must be included in your income tax return.