Edited version of private advice

Authorisation Number: 7920167902207

Date of advice: 26 February 2025

Ruling

Subject: CGT - trust deceased estate

Question

Will the transfer of the properties (except for property one) to the trust result in any capital gain or loss for the executor/legal personal representative (LPR) of XXXX estate?

Answer

No. Practice Statement PS LA 2003/12 Capital gains tax treatment of the trustee of a testamentary trust confirms the Commissioner will not depart from the ATO's long-standing administrative practice of treating the trustee of a testamentary trust in the same way that a legal personal representative is treated for the purposes of Division 128 of the Income Tax Assessment Act 1997 (ITAA 1997). As they are essentially treated as the same entity for the purposes of Division 128 of the ITAA 1997, there are no CGT consequences on the transfer of title of the properties from the legal personal representative (LPR) of the deceased estate to the trustees of the trust.

This ruling applies for the following periods:

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

Will of the Deceased

On X 20XX the deceased executed their Will and Testament (the Will). A copy of the Will is attached to the application.

The terms of the deceased's Will include:

a.            Clause X: The deceased's child is appointed as executor of the Will and trustee of the deceased's estate;

b.            Clause X(x): you gave and devised all interest in any real property and funds that you held in any bank account at the time of your death to your trustees to be placed by your trustees into a Discretionary Family Trust the said trust to be created upon my death and named the X Family Trust or any other name as selected by the trustees with the executor, and my grandchildren.

c.            Clause 3(d): My trustee shall hold the balance of my estate then remaining (hereinafter called "my residuary estate") Upon Trust for my child to retain or distribute as they see fit.

Probate

The deceased, passed away on X X 20XX and the deceased's child became executor of the Will and trustee/legal personal representative (LPR) of the estate from that time.

Probate was granted in respect of the deceased's Will on X XX 20XX

The deceased's estate has been fully administered.

Trust formation and constitution

On X X 20XX trustees executed a Trust Deed (Trust Deed) for the X Family Trust to be established. A copy of the Trust Deed is attached to the application.

The trust has subsequently been named the XX Trust.

All named trustees have resigned as trustees of the trust and company A (trustee) has been appointed as trustee.

Property Held by the Trust

Included in the deceased's estate were XX properties.

Property A was the deceased's main residence.

Clause X(x) of the deceased's will required that all interests in real property to be held in trust to be created upon his passing.

On XX X 20XX registered titles to all of the properties other than Property A were transferred to the deceased's child as the deceased's executor. Title to Property A was transferred to the deceased's child as the executor on XX X 20XX.

On X 20XX title to all of the properties other than Property A (being the main residence) were transferred to the trustees of the trust. Title to property A (main residence) was transferred from the deceased's child as executor of the deceased estate to a third party by way of sale on XX X 20XX.

All the trustees/executors are all residents for Australian tax purposes.

On XX X 20XX, all the beneficiaries signed and executed a Deed of Acknowledgement. A copy of the Deed of Acknowledgement is attached to the application.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 128-15(3)