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Edited version of private advice
Authorisation Number: 1051541006749
Date of advice: 5 July 2019
Ruling
Subject: Capital gains tax: testamentary trust: cost base of pre CGT shares
Question 1
Is there a CGT event when the shares held by the testamentary trust are transferred to the beneficiary?
Answer
No, ATO Practice Statement Law Administration PS LA 2003/12 Capital gains tax treatment of the trustee of a testamentary trust confirms the Commissioner's longstanding administrative practice of treating the trustee of a testamentary trust in the same way as a legal personal representative for the purposes of division 128 of the Income Tax Assessment Act 1997 (ITAA 1997).
Question 2
Is the cost base of the transferred shares the market value of the shares as at the date of death of the deceased?
Answer
Yes, the cost base and reduced cost base of the asset in the hands of the beneficiary is calculated in the same way as it would have been if the asset had passed to them from the deceased's legal personal representative. As the shares are pre CGT shares, this is the market value of the asset on the day of death in accordance with section 128-15 of the ITAA 1997.
This ruling applies for the following period:
Year ending 30 June 20xx
The scheme commences on:
1 July 20xx
Relevant facts and circumstances
The deceased died in 20XX.
The will of the deceased left the residual of the estate to the beneficiary.
The residual consisted of a share portfolio comprised entirely of pre CGT shares.
The shares were recorded in the Testamentary Trust at the market value as at the date of death of the deceased.
The trust will be vested and the shares transferred to the beneficiary.
Relevant legislative provisions
Income Tax Assessment Act 1997 division 128
Income Tax Assessment Act 1997 section 128-15
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