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Edited version of private ruling
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Ruling
Subject: Capital gains: Deceased Estate
Question 1
Can you disregard a CGT event on the settlement of a claim against an asset you inherited before 20 September 1985?
Answer
Yes
Question 2
Can you disregard a CGT on the sale of an asset you inherited before 20 September 1985?
Answer
Yes
This ruling applies for the following period
Year ended 30 June 2011
The scheme commenced on
1 July 2010
Relevant facts and circumstances
The deceased passed away prior to 20 September 1985
The dwelling of the deceased passed to you under a will.
A family member filed a claim in the Supreme Court against the property you inherited.
A negotiated settlement is reached and settled in the Supreme Court whereby the claimant gains a equitable interest in the property.
Relevant legislative provisions
Income Tax Assessment Act 1997
Section 104-10(5)
Section 128-15(2)
Reasons for decision
An asset owned by a deceased person just before his or her death is deemed to be acquired at the date of death by the deceased's legal personal representative or a beneficiary of the estate section 128-15(2) of the Income Tax Assessment Act 1997.
Where the date of death is prior to 20 September 1985 Section 104-10(5) provides that:
A capital gain or capital loss you make is disregarded if:
(a) you acquired the asset before 20 September 1985; or
(b) for a lease that you granted:
(i) it was granted before that day; or
(ii) if it has been renewed or extended - the start of the last renewal or extension occurred before that day.
You can disregard a CGT event when selling an interest in property you inherited before 20 September 1985.
You can disregard a CGT event when settling a claim on an interest in property you inherited before 20 September 1985.