Edited version of private advice

Authorisation Number: 1051836452648

Date of advice: 10 May 2021

Ruling

Subject: CGT - deceased estate

Question

Can the legal personal representative of the deceased estate, disregard a capital gain under subsection 128-15(3) of the Income Tax Assessment Act 1997 (ITAA 1997) when the deceased's property is transferred to a beneficiary?

Answer

Yes. Any capital gain or capital loss the legal personal representative makes if the asset passes to a beneficiary in your estate is disregarded on the basis that Division 128 of the ITAA 1997 can apply to your circumstances.

For more information on deceased estates and capital gains tax search for Quick Code 'QC 52245' on ato.gov.au or search for tax rulings and determinations in our Legal database at ato.gov.au/law

This ruling applies for the following periods:

For the year ending 30 June 20XX

For the year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

Your agent has advised us:

The deceased person died in 20XX.

Their will appointed Person A (the deceased's spouse) as the sole executor and beneficiary of the estate which included a residential property (the property).

It was long understood and accepted however by the family that the deceased person had always intended that the property was to be inherited by Person B (the deceased's son) once Person A died.

This intention continues to be accepted by all of the relevant family members.

The deceased person and Person B both signed a property transfer document approximately XX years ago as evidence of this intention.

The form was signed by both parties at the request of the deceased person as a security measure, in case this decision was ever in dispute however it was never finalised or lodged with the appropriate government body to legally transfer the property into Person B's name.

Person A did not obtain probate of the deceased person's Will, due to the accepted understanding that the property was to be inherited solely by Person B.

All of the other assets, excluding the property were owned by the deceased person and Person A in joint names.

Contributions towards the costs of ownership such as utilities and rates for the property have been paid for by Person B since the time it was acquired by the deceased person.

Person A died in 20XX and at that point in time the property still remained in the deceased person's legal name.

Person A's Will dated 20XX appointed certain children as executors and the estate was to be divided and held in separate testamentary trusts for a number of other surviving children beneficiaries of Person A.

In 20XX, Person C was appointed administrator of Person A's estate by court order and Letters of Administration were granted in 20XX.

In 20XX, Person C was also appointed administrator of the deceased person's estate by court order and Letters of Administration were granted in 20XX.

A proposed Deed of family arrangement between Person C (as administrator of the deceased person's estate), Person B and the other beneficiaries of Person A's estate plan to enter into an arrangement acknowledging Person B's entitlement to inherit the property.

The deceased estate is not yet fully administered with respect to the property.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 128-10

Income Tax Assessment Act 1997 section 128-15

Income Tax Assessment Act 1997 subsection 128-15(3)

Income Tax Assessment Act 1997 subsection 128-20(1)

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