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Edited version of private advice
Authorisation Number: 1051791382407
Date of advice: 21 December 2020
Ruling
Subject: Capital gains tax - deceased estate
Question 1
Will a capital gains tax (CGT) event occur because the shares are transferred to an exempt entity?
Answer
Yes. CGT event K3 will occur as the deceased owned a CGT asset prior to their death and the asset will pass to a tax advantaged entity.
Question 2
Will any capital gain made as a result of the transfer of the shares to the tax-advantaged entity be disregarded?
Answer:
Yes. As the deceased would have been entitled to a deduction for the gift of the shares to the deductible gift recipient (DGR) if that gift had been made prior to their death, any capital gain or capital loss made from the transfer of the shares to the DGR will be disregarded.
This ruling applies for the following periods:
Year ended 30 June 20XX
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The deceased died in 20XX.
The deceased's will provided that the will's residue will be distributed to entity R, an income tax exempt entity and a DGR.
Some of the shares in the portfolio are pre-CGT, but a majority are post-CGT.
All the shares will be transferred to entity R in-specie.
Probate has also been granted.
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