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Edited version of private advice
Authorisation Number: 1051833196952
Date of advice: 2 July 2021
Ruling
Subject: CGT - deceased estate - transfer of shares to beneficiary
Question 1
Can the legal personal representative of the Deceased's Estate (the Deceased), disregard any capital gain or loss under subsection 128-15(3) of the Income Tax Assessment Act 1997 (ITAA 1997), when the Deceased's shares in AAA Pty Ltd is transferred to a beneficiary?
Answer 1
Yes. Any capital gain or loss made by the legal personal representative of a deceased estate is disregarded under section 128-15 of the ITAA 1997 if an asset of the estate 'passes' to a beneficiary in accordance with section 128-20.
This ruling applies for the following period
Year ended 30 June 20XX
Year ended 30 June 20XX.
The scheme commences on
1 July 20XX.
Relevant facts and circumstances
Approximately X years ago the Deceased passed away.
A few years later the Deceased's spouse passed away.
AAA Pty Ltd was incorporated pre CGT and has been an Australian resident company for income tax purposes since incorporation.
AAA Pty Ltd holds six parcels of farming land, Lots 1-6.
All of the lots were acquired prior to 20 September 1985.
The land holdings are currently the only material assets of AAA Pty Ltd.
The land owned by AAA Pty Ltd has been used in farming businesses carried on by members of the Deceased Family and related entities.
It is agreed that the land owned by AAA Pty Ltd will be divided based on the following:
• Child A receiving Lot 1 and 2; and
• Child B receiving Lot 3,4,5 and 6.
A few years before the death of the Deceased A Family Agreement (referred to as the Heads of Agreement- HoA) was entered into which purported to deal with the way in which the various farming assets (including in particular the land owned by AAA Pty Ltd) were dealt with.
The Deceased's Will refers to the HoA as the basis upon which the farming assets including the land owned by AAA Pty Ltd were to be distributed between the Deceased's children.
Paragraph X of the Deceased's Will states the following:
Relevant clauses of agreement which detail the obligations of the parties were provided.
A short time later AAA Pty Ltd was placed in voluntary liquidation.
The Deceased's spouse's deceased estate will receive, on their behalf, the shares allocated to them form the Deceased's estate in accordance with the directions in the Deceased's Will.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 128-10
Income Tax Assessment Act 1997 section 128-15
Income Tax Assessment Act 1997 subsection 128-20