Issue
Does the 12 months period in items 1(b), 2(b) and 3(b) of subsection 30-15(2) of the Income Tax Assessment Act 1997 (ITAA 1997) for an executor of a deceased estate, commence at the date the property was purchased by the deceased?
Decision
Yes. The commencement date of the 12 months period in items 1(b), 2(b) and 3(b) of subsection 30-15(2) of the ITAA 1997 for an executor of a deceased estate is the date the property was purchased by the deceased.
Facts
The taxpayer is the executor of a deceased estate. As the executor, the taxpayer has made gift of property to a higher education institution. The property was purchased by the deceased during the 12 months before the executor proposes to gift the property.
The property is not trading stock of the deceased.
The higher education institution qualifies as a fund, authority or institution to which deductible gifts or contributions can be made.
Reasons for Decision
Division 30 of the ITAA 1997 provides an income tax deduction for gifts or contributions made to a fund, authority or institution.
Section 30-15 of the ITAA 1997 sets amongst other criteria the type of gift or contribution a taxpayer can make. The types of gift or contribution that are allowable deductions are: • money; or • property (including trading stock) that the taxpayer purchased during the 12 months before making the gift; or • an item of trading stock; or • property valued by the Commissioner of Taxation at more than $5,000.
Taxation Ruling IT 2622 states that on the death of a taxpayer the: • property of the deceased passes to the executor or administrator; and • executor or administrator steps into the shoes of the deceased and winds up the deceased's personal affairs.
In other words, the executor holds the deceased's property as absolute owner, subject to the fiduciary duty to the beneficiaries and perhaps also the creditors of the estate: Comm of Stamp Duties (Qld) v. Livingston [1965] AC 694 3 ALL ER 692.
Therefore, the taxpayer, as executor, is deemed to have purchased the property at the time the deceased purchased the property. Accordingly, the 12 months period of ownership commences from the date the deceased purchased the property that has been gifted.