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Edited version of your written advice
Authorisation Number: 1051437941962
Date of advice: 8 October 2018
Ruling
Subject: CGT – deceased estate – K3 event
Question
Are capital gains or losses that are made when shares owned by the deceased pass from the deceased estate to the beneficiary disregarded under subsection 118-60(1) of the Income Tax Assessment Act 1997 (ITAA 1997) if the beneficiary is a deductible gift recipient (DGR)?
Answer
Yes. In this case, both of the residual beneficiaries are deductible gift recipients and the deceased would have been entitled to a deduction under section 30-15 of the ITAA 1997 for the gift of shares had they been made during their lifetime. Accordingly, any capital gains or losses made from the disposal are disregarded.
This ruling applies for the following periods:
Year ended 30 June 2018
Year ended 30 June 2019
The scheme commences on:
1 July 2017
Relevant facts and circumstances
The deceased died in 20XX.
The deceased bequeathed X% of the residue of their estate and $X to entity R and X% of the residue of the estate to entity S.
Both entity R and entity S are Deductible Gift Recipients.
The deceased’s Will provided the Trustee with the power ‘to appropriate and/or partition any estate asset towards the entitlement of any beneficiary’.
The Trustee intends to transfer securities in publicly listed companies from the Estate to entity R and entity S in settlement of their entitlement under the Will of the deceased.
Relevant legislative provisions
Income Tax Assessment Act 1997 – Section 30-15
Income Tax Assessment Act 1997 – Section 104-215
Income Tax Assessment Act 1997 – Section 118-60
Income Tax Assessment Act 1997 – Section 995-1