Edited version of private advice

Authorisation Number: 1051897300943

Date of advice: 08 September 2021

Ruling

Subject: CGT - deceased estates

Question

Will any capital gain or loss be disregarded when the property is transferred to the beneficiary of the deceased estate under the agreeddeedof arrangement?

Answer

Yes.

Any capital gain or capital loss the legal personal representative makes if the asset passes to a beneficiary in your estate is disregarded.

Paragraph 128-20(1)(d) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that a CGT asset passes to a beneficiary of the deceased estate if the beneficiary becomes the owner of an asset under a deed of arrangement if:

(i)                 the beneficiary entered into the deed to settle a claim to participate in the distribution of the estate; and

(ii)                any consideration given by the beneficiary for the asset consisted only of the variation or waiver of a claim to one or more other CGT assets that formed part of the estate.

The requirements of section 128-20 of the ITAA 1997 are satisfied in your case. As such any capital gain or loss resulting from the transfer to the beneficiary will be disregarded.

This ruling applies for the following period:

Year ended 30 June 2021

The scheme commences on:

1 July 2020

Relevant facts and circumstances

The deceased owned a property.

As part of the administration of the estate, a deed of arrangement was entered into to have the property transferred to one beneficiary, being part of their share of the estate entitlement.

The deed of arrangement described how the assets of the estate were to be split between the beneficiaries. No additional assets were brought into the agreement.

The property has now been transferred to the beneficiary.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subsection 128-15(3)

Income Tax Assessment Act 1997 Paragraph 128-20(1)(d)