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Edited version of private advice
Authorisation Number: 1051986791821
Date of advice: 24 May 2022
Ruling
Subject: CGT - deceased estate
Question 1
Did the Estate of Person A (the Estate) acquire the Property before 20 September 1985?
Answer
The Estate is taken to have acquired the property on Person A's date of death, before 1985. In 20XX the court granted letters of administration of the unadministered estate of Person A. State legislation for administration of probate provides that where the court grants probate any property of the estate shall be taken to vest in the administrator or executor from the date of death.
Question 2
Will any income derived by the Estate before the completion of administration of the estate be assessable in the hands of the executors or administrators of the estate?
Answer
Yes. The Commissioner has stated in Taxation Ruling IT 2622Income tax: present entitlement during the stages of administration of deceased estates that income derived before the completion of administration of a deceased estate will be assessable in the hands of the administrator or executor under section 99 of the Income Tax Assessment Act 1936.
Question 3
Will any capital gain or loss on disposal of the Property by the Estate be disregarded?
Answer
Yes. Upon disposal of the Property CGT event A1 occurs under section 104-10 of the Income Tax Assessment Act 1997 (ITAA 1997). Subsection 104-10 (5) ITAA 1997 provides that if you acquired the asset before 20 September 1985 any capital gain or loss is disregarded. As you are taken to have acquired the asset before 1985 any capital gain or loss on the disposal is disregarded.
This private ruling applies for the following period:
Year ended 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
Person A acquired a property (the Property) as the sole proprietor before 1985.
Person A died intestate before 1985.
Letters of administration were granted to his spouse, Person B. Person B was also the sole beneficiary of the estate.
Person B did not complete administration of the estate before she died before 1985.
Person B left a valid will appointing her sibling Person C as executor of her estate. Person C was also the sole beneficiary of the estate.
Person C died before 1985 leaving a valid will appointing their child Person D as executor of her estate.
Person D predeceased their parent. The spouse of Person D was appointed substitute executor.
The beneficiaries of Person C's estate were the two children of Person D (Person C's grandchildren), Person E and Person F.
In 20XX the state trustee obtained grant of letters of administration in the estate of Person A.
The title to the Property had never been changed and remained in the name of Person A.
The Property is vacant land.
In the 20XX income year the state trustee sold the Property. The Property settled in the same income year.
The proceeds of the sale were distributed to Person E and Person F.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 104-10
Income Tax Assessment Act 1936 section 99