ATO Interpretative Decision
ATO ID 2002/1094
Income Tax
CGT - testamentary gift of propertyFOI status: may be released
This version is no longer current. Please follow this link to view the current version. |
-
This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Will the capital gains or capital losses made from CGT event K3, under subsection 104-215(1) of the Income Tax Assessment Act 1997 (ITAA 1997), be disregarded, under subsection 118-60(1) of the ITAA 1997, where shares owned by the deceased taxpayer just before they died are transferred by their executor to a gift deductible entity?
Decision
Yes, the capital gains or capital losses will be disregarded because the testamentary gift of property would have been deductible to the deceased under section 30-15 of the ITAA 1997 if it had been made by the deceased just before they died.
Facts
The taxpayer died during the year ended 30 June 2000. They bequeathed a portfolio of shares to a gift deductible entity pursuant to their last will.
The aggregate market value of the shares to be transferred, both at the date of death and currently, exceeds $5000.
The testamentary gift of property would have been deductible to the taxpayer under section 30-15 of the ITAA 1997 if it had not been a testamentary gift.
Reasons for Decision
When a CGT asset (eg. shares, real property) owned by the deceased just before they died passes to an exempt entity as a beneficiary in their estate, CGT event K3 in section 104-215 of the ITAA 1997 applies. Under subsection 104-215(3), the CGT event K3 is taken to happen just before the deceased's death
A gift deductible entity is an exempt entity, and therefore event K3 will apply to assets which pass to it from a deceased estate.
However, under subsection 118-60(1) of the ITAA 1997, a capital gain or capital loss made from a testamentary gift of property that would have been deductible under section 30-15 of the ITAA 1997 if it had not been a testamentary gift, is disregarded.
In accordance with the taxpayer's will, the gift deductible entity will be entitled to the shares from the deceased's estate.
As this gift of property to the gift deductible entity would have been deductible to the deceased if it had been made during their lifetime, any capital gains or capital losses made under section 104-215 of the ITAA 1997 will be disregarded in accordance with subsection 118-60(1) of the ITAA 1997.
Date of decision: 26 September 2002Year of income: Year ended 30 June 2000
Legislative References:
Income Tax Assessment Act 1997
section 104-215
subsection 104-215(1)
subsection 118-60(1)
Keywords
Capital gains tax
CGT deceased estates
CGT events K1-K6 - other events
ISSN: 1445-2782
| Date: | Version: | |
| You are here → | 26 September 2002 | Original statement |
| 30 July 2004 | Archived |
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
