A public ruling, when issued, is the published view of the Commissioner of State Revenue (the Commissioner) on the particular topic to which it relates. It therefore replaces and overrides any existing private rulings, memoranda, manuals and advice provided by the Commissioner in respect of the issue(s) it addresses.
Where a change in legislation or case law (the law) affects the content of a public ruling, the change in the law overrides the public ruling—that is, the Commissioner will determine the tax liability or eligibility for a concession, grant or exemption, as the case may be, in accordance with the law.
A person dies intestate, leaving three adult children who therefore share equally in the deceased’s estate. The estate consists of $140,000.00 cash and a block of land valued at $100,000.00. The beneficiaries are each entitled to a third interest in the land and a third of the cash. A wants cash only, whereas beneficiaries B and C want the land. It is proposed to appropriate the land to B and C. The extra land that each gets appropriated is valued at approximately $16,666.67. This is to satisfy that portion of their pecuniary legacy equal to that amount. It is proposed to pay A $50,000.00. The rest of the estate (i.e. $90,000.00) can be distributed equally (i.e. $30,000.00 each) without the need for any further appropriation.
A transfer of the land to B and C as tenants in common in equal shares is made for no other purpose than to appropriate the assets of the intestate estate. B and C also receive $30,000.00 cash each and A receives $80,000 cash. The transfer to B and C will be exempt from transfer duty.
As for Example 1 except the deceased has a will stating that A, B and C are to share equally in the deceased’s estate. The will contains no power to appropriate. An appropriation as in Example 1 is carried out. The transfer to B and C will be exempt from transfer duty.
A deceased’s will devises a house and land valued at $100,000.00 to A and B in equal shares. B does not want to take ownership of his/her entitlement and agrees to accept $50,000.00 from C for the half share which is to be transferred to C who is not a beneficiary. The will contains a power to appropriate. Transfer document (a) is signed by the executor of the deceased’s estate. This document conveys a half share in the house and land to A. Transfer document (b) is signed by the executor of the deceased’s estate. This document conveys a half share in the house and land to C. C pays B $50,000.00.
In this case, the transfer (a) will be exempt from transfer duty as it gives effect to a distribution in the estate of a deceased person under s.124(a) of the Duties Act.
The transfer (b) will be assessed to full transfer duty. The transfer to C is not an appropriation as C is not a beneficiary under the deceased’s will. Further, the conveyance to C does not give effect to a distribution in estate of a deceased person. What has in effect occurred is the sale by B of his interest in the deceased’s property.
A is bequeathed a pecuniary legacy of $30,000.00. The executor asks A to accept, in satisfaction of his pecuniary legacy, a transfer of a parcel of land in Queensland. A agrees. At the time of the transfer the land is valued at $40,000.00. A’s appropriated share will be assessed to duty on $40,000.00. The appropriation of A’s share does not give effect to a distribution in the estate of the deceased person as the benefit to A is significantly greater than the pecuniary legacy contained in the will and the executor has not followed, as closely as possible, the intent of the will in relation to the overall benefit to each beneficiary.
As for Example 4 except that, at the time of the transfer, the land is valued at $31,000.00. The transfer of A’s appropriated share will be exempt from transfer duty. The transfer is considered to give effect to a distribution in the estate of a deceased person, as the variation in value is not significant.
Commissioner of State Revenue
Date of issue: 24 February 2009
|Public Ruling||Issued||Dates of effect|
|DA124.1.1||24 February 2009||24 February 2009||Current|
|Supersedes Practice Direction DA 20.2||12 February 2008||12 February 2008||23 February 2009|