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Death and income tax – Some discrete issues: part 2


This is the final part of a two-part series examining some standalone issues about tax and deceased estates. This article looks at the intricacies of the main residence exemption as it applies to a trustee or beneficiary of the estate. It examines how the cost base of the deceased’s dwelling is determined in the hands of the trustee/beneficiary and the conditions that need to be satisfied for a full exemption, including the Commissioner’s safe harbour for the sale of a dwelling outside the standard two-year exemption period. Importantly, the article also considers the recent changes that can deny the main residence exemption in some cases where the deceased person or beneficiary is a foreign resident. This article also considers when an agreement will be accepted by the Commissioner as satisfying the requirements of s 128-20(1)(d) of the Income Tax Assessment Act 1997 (Cth) as being a deed of arrangement under which an asset passes to a beneficiary.

Author profiles

Ian Raspin
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Lyn Freshwater
Lyn is a member of the Tax Counsel Network in the Australian Taxation Office in Brisbane. Her work in recent years has focused on trust-related issues including litigation (such as EISS, Lewski, Sandini) and various public advice and guidance products. She led the development of, and authored, draft Practical Compliance Guideline PCG 2017/D12 (liability of a legal personal representative of a deceased person). - Current at 12 July 2018
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Mark Morris FTI
Mark is a Senior Tax Counsel with BNR Partners. - Current at 03 December 2020
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