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Edited version of private advice
Authorisation Number: 1052075314073
Date of advice: 9 January 2023
Ruling
Subject: Capital gains tax
Question 1
Are the executors of the Estate required to include a net capital gain (or loss) in relation to shares, that were acquired by the Deceased after 19 September 1985 (post-CGT shares) and will be transferred to the non-resident beneficiaries, in the assessable income of the Deceased's date of death return pursuant to CGT event K3 in section 104-215 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes.
Based on the information provided to the Commissioner, the requirements of section 104-215 of the ITAA 1997 will be met in relation to the transfer of the post-CGT shares. Therefore, the Executors are required to include a net capital gain (or loss) for the post-CGT shares that will be transferred by the Executors of the Estate to the non-resident beneficiaries in the assessable income of the Deceased's date of death return pursuant to CGT event K3.
Question 2
Is the 50% discount for capital gains in Division 115 of the ITAA 1997 available to any capital gain arising from the transfer of post-CGT shares that were acquired by the Deceased at least 12 months prior to their death and do not have an indexed cost base, from the Executors of the Estate to the non-resident beneficiaries, that results in CGT event K3?
Answer
Yes.
Based on the information provided to the Commissioner, the requirements in Division 115 of the ITAA 1997 for the 50% discount for capital gains will be met for the capital gain in question. The 50% discount can be claimed in the Deceased's date of death return.
This ruling applies for the following period:
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The Deceased passed away several months ago.
The Deceased was an Australian resident for taxation purposes.
The assets of the Estate include a large share portfolio consisting of shares and securities (shares) of companies listed on the Australian stock exchange.
Some shares were acquired by the deceased before 20 September 1985 (pre-CGT shares) and some shares were acquired on or after 20 September 1985 (post-CGT shares).
In the will of the Deceased, the residue of their Estate is to be divided equally between the children.
All the beneficiaries live overseas and are non-residents for Australian taxation purposes.
The majority of the Executors of the Estate are Australian residents for Australian taxation purposes.
Assumptions
Each non-resident beneficiary and their associates hold less than 10% shareholding or unit holding in any of the listed companies or entities in the share portfolio of the Estate at any time.
Any capital gain resulting from the transfer of the shares from the Executors of the Estate to the non-resident beneficiaries is worked out using a cost base that has been calculated without reference to indexation.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 104-215
Income Tax Assessment Act 1997 Division 115