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Edited version of private advice
Authorisation Number: 1051621232125
Date of advice: 18 December 2019
Ruling
Subject: Capital gains tax on the sale of a foreign property.
Question
Is the CGT asset taken to have been acquired by the taxpayer on the date of your parent's death as per section 128-15 of the Income Tax Assessment Act 1997?
Answer
Yes.
The CGT asset passed to the taxpayer in their capacity as beneficiary of the deceased individual's estate in accordance with the intestacy laws of the relevant jurisdiction. Under section 128-15 of the Income Tax Assessment Act 1997 (ITAA 1997), the CGT asset is therefore taken to have been acquired by the taxpayer on the date of the deceased's death.
As your circumstances are similar to the withdrawn ATO Interpretative Decision ATO ID 2006/341 you are taken to have received your share of the property on the day your parent died in 19XX, and the property will not be subject to capital gains tax.
Further information about capital gains tax can be found by searching 'QC 22153' on ato.gov.au.
This ruling applies for the following period:
Year ended 30 June 2019
The scheme commences on:
1 July 2018
Relevant facts and circumstances
You were born in foreign country in 19XX.
Your parents and relative remained in the country.
Agricultural land owned by the family has been passed down through generations.
The land was compulsorily acquired (confiscated) by a foreign government during the 19XXs. Prior to the compulsory acquisition, the property was held by your parents.
One parent passed away in 19XX
Your remaining parent passed away in 19XX.
You and your spouse left the foreign country and moved to Australia in 19XX.
Following the country regaining independence rights and changing its political system, a program commenced to re-establish ownership rights in your former country.
Only permanent residents in the foreign country were entitled to claim for land restitution.
Your relative applied and was successful in having the confiscated land returned to the family.
In 19XX, your relative transferred half of the property to you.
This property has generated some agistment income which has been reported as income in Australia by yourself.
Had the property not been acquired by the foreign government, the property would have been transferred to yourself and your relative on the death of your family member in 19XX.
The property has been sold in the 2018-19 financial year.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 128-15
Income Tax Assessment Act 1997 Section 128-20