| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your written advice
Authorisation Number: 1013112054646
Date of advice: 27 October 2016
Ruling
Subject: Capital gains tax for deceased estates
Question
Will any capital loss or gain that arose from the transfer of the property from the trustees to the beneficiaries be disregarded?
Answer
Yes
This ruling applies for the following period
Year ended 30 June 20YY
The scheme commences on
1 July 20XX
Relevant facts and circumstances
The deceased passed away in 20ZZ.
The will directed the trustees to sell the real and personal property and pay the proceeds to the beneficiaries in equal shares after the payment of certain debts.
Instead of selling the property, the trustees transferred the property to the beneficiaries.
The property was then sold to a third party in September 20XX and the proceeds split equally.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 128-15
Income Tax Assessment Act 1997 section 128-20
Reasons for decision
Division 128 of the ITAA 1997 contains rules that apply when an asset owned by a person just before they die, passes to their legal personal representative or to a beneficiary in a deceased estate.
Subsection 128-15(3) of the ITAA 1997 provides that any capital gain or capital loss the legal personal representative makes if the asset passes to a beneficiary of a deceased estate is disregarded.
Under section 128-20 of the ITAA 1997, an asset passes to a beneficiary in a deceased estate if the beneficiary becomes the owner of the asset:
(a) under a will, or that will as varied by a court order, or
(b) by operation of an intestacy law, or such law as varied by a court order, or
(c) because it is appropriated to the beneficiary by the deceased legal personal representative in satisfaction of a pecuniary legacy or some other interest or share in your estate, or
(d) under a deed of arrangement if:
(i) the beneficiary entered into the deed to settle a claim to participate in the distribution of the deceased estate, and
(ii) any consideration given by the beneficiary for the asset consisted only of the variation or waiver of a claim to one or more other CGT assets that formed part of the estate.
In this case the trustees transferred the property to the beneficiaries to satisfy their interest or share in the estate. As such, subsection 128-15(3) of the ITAA 1997 will apply to disregard any capital gain or loss resulting from this transfer.
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).
