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Edited version of private advice
Authorisation Number: 1052201746152
Date of advice: 7 December 2023
Ruling
Subject: CGT - disposal
Question
Will CGT event A1 under section 104-10 of the Income Tax Assessment Act 1997 (ITAA 1997) happen to the superannuation fund upon the transfer of the property to the estate?
Answer
Yes.
This ruling applies for the following period:
Year ending 30 June 20YY
The scheme commenced on:
1 July 2023
Relevant facts and circumstances
The only asset in the superannuation fund is a property.
The only member of the superannuation fund is now deceased.
Under the terms of the will, the legal representative became the director of trustee company.
An in-specie transfer of land will occur to the beneficiaries of member's estate as tenants in common to satisfy the will.
The market value of the land at date of death is greater than the cost base.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 108-5
Income Tax Assessment Act 1997 section 104-10
Income Tax Assessment Act 1997 section 112-20
Income Tax Assessment Act 1997 section 116-30
Reasons for decision
A capital gain or a capital loss may arise if a CGT event happens to a CGT asset. Section 108-5 of the ITAA 1997 states that a CGT asset is any kind of property, or a legal or equitable right that is not property.
The most common CGT event is CGT event A1. Section 104-10 of the ITAA 1997 explains that this event occurs whenever there is a change of ownership for a CGT asset from the taxpayer to another entity, whether because of some act or event or by operation of law.
As there was a change in the ownership of the property at the time of the transfer, CGT event A1 happened as the property is taken to have been disposed of to the deceased estate by the superannuation fund.
Section 116-30 of the ITAA 1997 provides that if no capital proceeds are received from a CGT event, taxpayers are taken to have received the market value of the CGT asset that is the subject of the CGT event. In this case, the superannuation fund gave a CGT asset to the deceased estate without receiving any proceeds in return. Therefore, it will be taken to have received the market value for the property.