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Edited version of private advice
Authorisation Number: 1051970903620
Date of advice: 7 April 2022
Ruling
Subject: CGT - statutory trustees
Question 1
Did you make a capital gain as statutory trustees for the sale of the property located at XXXX?
Answer
No. CGT event A1 occurred when the statutory trustees sold the property. Subsection 110-25 (2) of the Income Tax Assessment Act 1997 (unless otherwise stated all further references are to this act) provides that the first element of the cost base is the total of the money you paid, or are required to pay, in respect of acquiring the property and the market value of any other property you gave, or are required to give, in respect of acquiring the asset. Section 110-35 provides that certain incidental expenses of buying or selling an asset can be included in the cost base.
Under the terms of the court order that appointed you as trustees you are required to distribute the proceeds of the sale of the property to the prior owners, less costs and expenses. It is reasonable to expect that the costs and expenses would be included in the cost base under s110-35. As such the capital proceeds will be equal to your cost base and there will be no capital gain.
Question 2
Will you as statutory trustees be required to lodge an income tax return for the 2021-2022 income year?
Answer
No.
Subsection 161(1) of ITAA 1936 also provides that:
Every person must, if required by the Commissioner by notice published in the Gazette, give to the Commissioner a return for a year of income within the period specified in the notice.
In legislative instrument LI 2022/8, the Commissioner requires at table E that every trustee that derived income during the income year must lodge a return, unless covered by tables K, L, M, or O. You do not meet the circumstances described in any other table.
As you did not derive income during the income year you are not required to lodge a return.
This private ruling applies for the following periods:
Year ending 30 June 20XX
The scheme commences on:
xx October 20XX
Relevant facts and circumstances
You were appointed by the Supreme Court of Queensland as Statutory Trustees for the sale of a property in 20XX, pursuant with section 38 (1) of the Property Law Act 1974 (Qld).
The trustees entered a contract for sale in the 20XX-XX income year with settlement occurring in the 20XX-XX income year.
You are holding the net capital proceeds on trust pending agreement between the prior owners regarding their distribution.
Relevant legislative provisions
Income Tax Assessment Act 1936 subsection 161(1)
Income Tax Assessment Act 1997 subsection 110-25(2)
Income Tax Assessment Act 1997 section 110-35