Edited version of private advice

Authorisation Number: 1052369488633

Date of advice: 25 March 2025

Ruling

Subject: Deceased estate

Question 1

Is the trustee of the deceased estate entitled to the capital gains tax exemption under section 118-195 of the Income Tax Assessment Act 1997 ('ITAA 1997') in relation to the disposal of the Property?

Answer 1

Yes.

It has been determined that, disregarding legal disability, the deceased had a vested and indefeasible interest in the entire trust asset, thereby having absolute entitlement to the Property. Consequently, section 106-50 of the ITAA 1997 applies to treat the Property as an asset of the deceased for CGT purposes, prior to their death. As a result, the main residence exemption is allowable under section 118-195 of the ITAA 1997.

This private ruling applies for the following period:

Year ended XX June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

In 19XX the deceased was in an accident and, as a result, was awarded money.

The money was paid to the Court to be invested on behalf of the deceased.

In XX 19XX, a declaration of Trust was created whereby the deceased was the beneficiary and the Solicitors of the deceased were listed as trustees.

An application was made by the trustees, on behalf of the deceased, for the money to be applied in purchasing a property for the deceased to reside in.

In XX 19XX, the Court ordered that payment of moneys be transferred to the trustees for the purpose of the application made.

In XX 19XX, the Property was purchased for the sum of $XX.

Per clause X of the Court order, the certificate of title was to be recorded under the names of the trustees, which subsequently occurred in XX 19XX.

The Property was the deceased's main residence throughout the ownership period and was never used for income producing purposes.

The Property is less than two hectares in size and the deceased never had an ownership interest in any other properties.

During the ownership period, all costs relating to the maintenance of the Property were paid out of an account under the name of the Court.

In XX 20XX, the deceased passed away intestate.

Grant of Probate was granted to the State Trustees Office by the Supreme Court in XX 20XX.

The Property remained vacant until it was sold in XX 20XX by the State Trustees Office.

Settlement took place within two years of the deceased's death.

The money from the sale of the Property formed part of the Estate of the Deceased.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 106-50

Income Tax Assessment Act 1997 section 118-195