• Death on or after 20 September 1985

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    If you die on or after 20 September 1985, the following is relevant in calculating any capital gain or loss when a later CGT event happens to the asset - for example, a beneficiary in your estate sells it.

    Asset you acquired before 20 September 1985

    Your legal personal representative or a beneficiary in your estate is taken to have acquired the asset on the day you die.

    The first element of the cost base or reduced cost base - the amount they are taken to have paid for the asset - is the market value of the asset on the day you die.

    If, on or after 20 September 1985, you make a major improvement to a pre-CGT asset, when you die the improvement is not treated separately from the pre-CGT asset as a post-CGT asset. This is so for 2 reasons.

    • Separate asset treatment applies only if a CGT event happens in relation to the pre-CGT asset but no CGT event happens when you die.
    • Separate asset treatment applies only to post-CGT improvements made to pre-CGT assets.

    When you die, your legal personal representative or beneficiary is taken to have acquired assets of your deceased estate - including the pre-CGT asset that was improved - at the date of your death, that is, on or after 20 September 1985. The improvement in this situation was not made to a pre-CGT asset.

    Asset you acquired on or after 20 September 1985

    Your legal personal representative or a beneficiary in your estate is taken to have acquired the asset on the day you die.

    The cost base or reduced cost base of the asset on the day you die is taken to be the first element of the cost base of the legal personal representative or the beneficiary receiving the asset.

    Expenditure incurred by a legal personal representative

    A beneficiary can include in the cost base or reduced cost base any expenditure incurred by the legal personal representative that would have been included in their cost base if they had sold the asset instead of distributing it to the beneficiary. The expenditure can be included in the cost base on the day it was incurred.

    Example

    Transfer of an asset from the executor to a beneficiary

    Mary died on 13 October 1999 leaving 2 assets: a parcel of 2,000 shares in ABC Ltd and a vacant block of land. John was appointed executor of the estate.

    Any capital gain or loss on transfer of the assets to John, the legal personal representative, is disregarded. John sells the shares to pay Mary's outstanding debts and, as the shares are not transferred to a beneficiary, any capital gain or loss on this disposal must be included in the tax return for Mary's deceased estate.

    When all debts and tax have been paid, John transfers the land to Mary's beneficiary, Jim, and pays the conveyancing fee of $5,000. As the land is transferred to a beneficiary, any capital gain or loss is disregarded. The first element of Jim's cost base is Mary's cost base on the date of her death. Jim is also entitled to include in his cost base the $5,000 John spent on the conveyancing.

    Last modified: 18 Sep 2009QC 18323