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Edited version of private ruling

Authorisation Number: 1011474149268

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Ruling

Subject: Capital gains tax - Deceased estate - deductible gift recipient and tax exempt entity

Question

Is the capital gain made on the transfer of shares to a deductible gift recipient and tax exempt entity, disregarded?

Answer

Yes.

This ruling applies for the following period:

Year ended 30 June 2010

The scheme commences on:

1 July 2009

Relevant facts and circumstances

The deceased) passed away late last year.

The deceased acquired shares in company X prior to their death.

Company X shares are listed on the Australian Stock Exchange.

The deceased bequeathed in their Will a specified percentage amount of their estate to a deductible gift recipient and tax exempt entity.

As trustee of the deceased estate you are going to transfer the deceased's company X shares to a deductible gift recipient and tax exempt entity- being the specified percentage amount of the deceased's estate.

The organisation is a tax exempt and deductible gift recipient.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 118-60

Income Tax Assessment Act 1997 Section 104-215

Income Tax Assessment Act 1997 Section 30- 15

Reasons for decision

Capital gains tax (CGT) event K3 happens if an asset passes from a deceased estate to a tax advantaged entity. The time of the event is when the individual passes away.

Any capital gain or capital loss from this event is disregarded if the gift is made to a deductible gift recipient and the gift would have been income tax deductible had it not been a testamentary gift.

In order for a gift to be deductible it must:

In your case, CGT K3 event occurred on the deceased's date of death and the organisation is a deductible gift recipient and tax exempt entity.

Therefore, as the deceased would have been entitled to a deduction if they had gifted the shares to the organisation during their lifetime, any capital gain made is disregarded when the company X shares are transferred to this entity.

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