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Edited version of your written advice
Authorisation Number: 1012776064021
Ruling
Subject: Capital gains tax
Questions
For the purpose of 12 month ownership, in regard to the CGT discount, is the date the beneficiary acquired the pre-CGT shares the date of death of the deceased?
Yes.
For the purpose of 12 month ownership, in regard to the CGT discount, is the date the beneficiary acquired the post-CGT shares the date the deceased acquired them?
Yes.
This ruling applies for the following period
Year ended 30 June 2015
The scheme commenced on
1 July 2014
Relevant facts
Your late parent passed away in 20XX.
Their final Will you were bequeathed their share portfolio in its entirety.
There was a delay in granting probate and the shares were transferred to your name in, 20XX.
The shares were always going to be transferred to you and had no part in the delay in granting probate.
You wish to change the structure of the portfolio and to avail of the 50% CGT discount.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 115-30
Reasons for decision
On the death of a person, the property of the deceased person passes to their estate, legal control over which is exercised by an executor or administrator. There is a general rule that any capital gain or capital loss made by the deceased on the transfer of their property will be disregarded.
Essentially, any capital gain or capital loss occurring after the death of a person will either belong to the deceased estate or to the beneficiaries of the estate. It will not belong to the individual who has passed away.
The CGT treatment applicable to executors and beneficiaries on disposal of shares belonging to a person who has died is dependent on when the deceased person acquired the shares.
Date of acquisition of shares by beneficiary or legal personal representative
If an individual acquires shares owned by a deceased person as a beneficiary or as the deceased persons legal personal representative (trustee) they are taken to have acquired the shares on the day the person died.
Deceased person acquired their shares before 20 September 1985
If the deceased person acquired their shares before 20 September 1985, the first element of the beneficiary's or trustees cost base and reduced cost base is the market value of the shares on the day the person died.
Deceased person acquired their shares after 20 September 1985
If the deceased person acquired their shares after 20 September 1985, the first element of the beneficiary's or trustees cost base and reduced cost base is taken to be the cost base and reduced cost base of the shares on the day the person died.
Discount method
For the CGT discount to apply, the beneficiary or trustee must have acquired the shares at least 12 months before disposing of them. For the purposes of this 12 month ownership, the beneficiary or trustee is taken to have acquired the shares at one of the following times:
• for pre-CGT shares, the date the deceased died, and
• for post-CGT shares, the date the deceased acquired them.
Therefore, in your case, you are entitled to use the CGT discount method when selling shares in the portfolio you inherited from your parent as the date since they acquired the shares (and therefore the date you are taken to have acquired them) is well past the required 12 month period.