Taxation Determination

TD 93/36

Income tax: capital gains: what are the capital gains tax consequences where a legal personal representative (LPR) purchases an asset to satisfy a general legacy?

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FOI status:

may be releasedFOI number: I 1214325

This Determination, to the extent that it is capable of being a 'public ruling' in terms of Part IVAAA of the Taxation Administration Act 1953 , is a public ruling for the purposes of that Part. Taxation Ruling TR 92/1 explains when a Determination is a public ruling and how it is binding on the Commissioner. Unless otherwise stated, this Determination applies to years commencing both before and after its date of issue. However, this Determination does not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 21 and 22 of Taxation Ruling TR 92/20).

1. A person may provide in his or her will that property of a general description be left to a specified beneficiary. If the deceased did not own an asset of that description at the time of death, the LPR (after paying the debts and other expenses of the estate) may purchase an asset to satisfy that general legacy.

2. The beneficiary for whom the asset is acquired by the LPR is absolutely entitled to that asset as against the LPR. Accordingly, the asset is taken to have been vested in the beneficiary and the acts of the LPR are taken to be the acts of the beneficiary (section 160V of the Income Tax Assessment Act 1936 ). The beneficiary is taken to have acquired the asset at the time it was acquired by the LPR. Costs incurred by the LPR which can be included in the cost base of the asset are included in the cost base to the beneficiary of the asset.

3. When legal ownership of the asset is transferred from the LPR to the beneficiary, there is no disposal of the asset for CGT purposes (section 160M(1A)).

Example: Jane's will leaves a general legacy of 1,000 shares in XYZ Ltd to Bill. As Jane does not own any shares in XYZ Ltd at the time of her death, her executor purchases the shares on 23 April 1992 for $2,500.Bill is deemed to acquire the shares on 23 April 1992 for an acquisition consideration of $2,500.

Commissioner of Taxation

Previously issued as Draft TD 93/D5


ATO references:
NO 92/1427-5 (CGTDET38)

ISSN 1038 - 8982

Related Rulings/Determinations:


Subject References:
CGT asset
cost base;
date of acquisition;
deceased estates;
general legacy;
legal personal representative

Legislative References:
ITAA 160V;
ITAA 160M(1A)

TD 93/36 history
  Date: Version: Change:
You are here 11 March 1993 Original ruling  
  29 November 2006 Original ruling + note Repeal provision note
  21 April 2010 Consolidated ruling Addendum