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Edited version of private advice
Authorisation Number: 1052293709752
Date of advice: 21 August 2024
Ruling
Subject: CGT - testamentary trust
Question
Are you entitled to the full main residence exemption on the disposal of your interest in the property?
Answer
Yes.
Having considered your circumstances and the relevant factors, the Commissioner agrees the property was acquired under the will of the deceased and in accordance with our view in Taxation Determination TD 1999/74 Income tax: capital gains: in what circumstances does a trustee of a deceased estate acquire an ownership interest in a dwelling 'under the deceased's will' for the purposes of subsection 118-210(1) of the Income Tax Assessment Act 1997?
The ownership interest in the property was acquired for occupation by a beneficiary of the trust pursuant to the terms of the deceased's will. The requirements in subsection 118-210(3) of the Income Tax Assessment Act 1997 (ITAA 1997) are satisfied and you can disregard any capital gain or capital loss made on the disposal of the property.
Law Administration Practice Statement PS LA 2003/12 Capital gains tax treatment of the trustee of a testamentary trust confirms the Commissioner's longstanding administrative practice of treating the trustee of a testamentary trust in the same way as a legal personal representative for capital gains tax purposes.
This ruling applies for the following period:
Income year ended 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
On XX XX 20XX, the deceased passed away leaving a will.
On XX XX 20XX, letters of administration were granted to the administrators. The deceased's will empowered the administrators to create the trust which was empowered to invest in property for the occupation of the beneficiary.
On XX XX 20XX, the trust and the beneficiary purchased a property as tenants in common. The trust held an XX% interest and the beneficiary held a XX% interest.
In XX 20XX, the trust and the beneficiary sold the property.
From the date of purchase until the date of sale, the property was the main residence of the Beneficiary or was otherwise treated as such.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-145
Income Tax Assessment Act 1997 section 118-210