Edited version of private advice

Authorisation Number: 1052180614879

Date of advice: 13 October 2023

Ruling

Subject: CGT - assets held as executor

Question 1

Does capital gains tax (CGT) event A1, or another CGT event, happen to you due to the sale of property A?

Answer

No.Having considered your circumstances and the relevant factors relating to your situation, the Commissioner accepts that although you were the legal owner of the property, it was never intended for you to have any beneficial ownership of the property. Therefore, you will not have a CGT event A1 or any other CGT event occurring when your legal ownership ends.

Question 2

Does capital gains tax (CGT) event A1, or another CGT event, happen to you due to the sale of property B?

Answer

No. Having considered your circumstances and the relevant factors relating to your situation, the Commissioner accepts that although you were the legal owner of the property, it was never intended for you to have any beneficial ownership of the property. Therefore, you will not have a CGT event A1 or any other CGT event occurring when your legal ownership ends.

Question 3

Is the interest earned on term deposits held in Bank A included in your assessable income under section 6-5 of the Income Tax Assessment Act 1997?

Answer

No. Having considered your circumstances and the relevant factors relating to your situation, the Commissioner accepts that although you were the legal owner of the term deposits, it was never intended for you to have any beneficial ownership of the money deposited in the term deposit from your late relatives estate. You are the legal owner of the bank accounts is your capacity as the executor and must deal with the money as directed by the will of the deceased and for the benefit of the beneficiaries of the said will.

This ruling applies for the following periods:

Year ended 30 June 2022

Year ended 30 June 2023

The scheme commenced on:

1 July 2021

Relevant facts and circumstances

Residential Properties:

You are the sole executor of your late parents' estates. Parent A pre-deceased Parent B.

As executor, you received titles to two properties. Property A was always the principal residence of your parents until their respective deaths. Property B was wholly owned by Parent A.

You sold both properties by contract during the 2022-23 income tax year. You were named the seller on each contract of sale as personal representative of the Estate.

All Bills relating to the properties were addressed to the Estate of the deceased or the Estate c/- the executor.

A deceased Trust Estate return for Parent A, including a net capital gain has been lodged by your tax agent and income tax assessed was paid by the Estate.

You are the legal owner in your capacity as the executor only and have no beneficial rights regarding the property or the proceeds of the disposal.

You are legally bound to deal with the property and the proceeds as set out in Parent A's Will. The proceeds must be distributed among all of the deceased's children in accordance with Parent A's Will.

Bank Interest:

As executor of your late Parent B's estate, you set up a bank account while the estate was being administered. As the bank is member owned you had to set up the account in your name first, as an individual. Once this was done, the bank created an account for your late Parent B's estate.

You had intended to set up term deposits in the name of the deceased estate, as executor, however, this did not eventuate due to confusing advice you received from the bank.

The money invested in the term deposits is sourced from the Estate account and returned to it. The interest earned is also returned to the Estate account.

You did not provide the bank with a Tax File Number (TFN) and as a result, the bank has withheld tax on the interest credited to the account in your name. You did not apply for a TFN for the Estate because the interest credited to the account was less than the tax-free threshold for both the 2022- and 2023-income tax years.

Your tax agent applied for a TFN for the Estate when preparing the Estate's 2023 income tax return. For the 2023 income tax year, the estate income tax return will return the interest derived with TFN withholding tax. These amounts have been pre-filled to your individual income tax return, but you plan to exclude these amounts when lodging your return.

Bank interest with no TFN Withholding tax was reported for the 2022 income tax return. You do not plan to lodge a tax return for the Estate for 2022 given this is the only income and it is below the tax free threshold. Given this interest belongs to the Estate you will not declare this income in your individual 2022 income tax return.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1997 part 3-1

Income Tax Assessment Act 1997 section 104-10