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Edited version of private advice
Authorisation Number: 1052191796780
Date of advice: 16 November 2023
Ruling
Subject: CGT - deceased estate
Question
Will assessable capital gain arise upon the transfer of the land assets by Individual A to another entity/owner?
Answer
No, Individual A will not have an assessable capital gain upon the transfer of the land assets to another entity/owner because the assets are pre capital gains tax (CGT). Section 128-15 of the Income Tax Assessment Act 1997 (ITAA 1997) sets out what happens to a CGT asset that a deceased taxpayer owned just before their death that devolves to their legal personal representative or passes to a beneficiary in their estate. Under subsection 128-15(2) a beneficiary is taken to have acquired the asset of the day the deceased died. The assets passed to you under the deceased's will (section 128-20), and because they passed away before 20 September 1985, you have acquired pre-CGT assets.
This ruling applies for the following period:
Year ending 30 June 2024
The scheme commenced on:
X December 19XX
Relevant facts and circumstances
The deceased owned the following farming lands (land assets) in Australia as follows:
Crown Lease xx/xx
Crown Lease xx/xx
Certificate of Title xx/xx
There have been no property improvements or additions to the abovenamed land assets after 20 September 1985.
The deceased died on xx/xx/19xx. Their will was signed on xx/xx/19xx and probate was granted appointing Executor and Individual A's parent as the Executors and Trustees of the deceased estate. The deceased's will created testamentary trusts with the ultimate beneficiary being the deceased's grandchild - Individual A.
The Executors and Trustee continued to hold the land as trustees of the testamentary trusts until it was agreed by all parties to settle the land upon the ultimate beneficiary, Individual A, which occurred on X April 19XX.
It is proposed to transfer the abovenamed land assets from Individual A to a discretionary trust.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 128-15
Income Tax Assessment Act 1997 subsection 128-15(2)
Income Tax Assessment Act 1997 section 128-20