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A legal personal representative or beneficiary of your estate can choose to claim frozen indexation or the CGT discount if they acquire the asset from the deceased estate on or before 11.45 am on 21 September 1999.
As a general rule, you are entitled to index elements of the cost base of an asset only if you have owned it for at least 12 months when you dispose of it. If a legal personal representative or beneficiary receives an asset from an estate, the 12-month period is measured from the time the deceased acquired the asset and not from the date of death.
If the legal personal representative or beneficiary acquires the asset on or before 11.45 am on 21 September 1999 but disposes of the asset after that time, they may choose to index the cost base or claim the CGT discount. The CGT discount is only available if the beneficiary or legal personal representative is an individual, a trust or a complying superannuation entity.
To be eligible for the CGT discount, the legal personal representative or beneficiary must have acquired the asset at least 12 months before disposing of it. For the purposes of this 12-month ownership test, the legal personal representative or beneficiary is taken to have acquired the asset at one of the following times:
- if the deceased person acquired the asset prior to 20 September 1985 - the date the deceased died
- if the deceased person acquired the asset on or after 20 September 1985 - the date the deceased acquired it.
If the legal personal representative or beneficiary acquires the asset after 11.45 am on 21 September 1999, only the CGT discount is available.
Indexing your cost base and CGT discount
Leonard acquired a property on 14 November 1998 for $26,000. He died on 6 August 1999 and left the property to Gladys. She sold the property on 18 December 1999 for $40,000.
The property was not the main residence of either Leonard or Gladys.
Gladys acquires the property on 6 August 1999. However, for the purpose of determining whether she has owned the property for at least 12 months, she is taken to have acquired it on 14 November 1998 - the day Leonard acquired it. At the time of disposal she is taken to have owned the property for more than 12 months. As she acquired it before 11.45 am on 21 September 1999 and disposed of it after that date, Gladys can choose to index the cost base. If she does not choose to index the cost base she can claim the CGT discount.
Last modified: 18 Sep 2009QC 18323