Edited version of private advice

Authorisation Number: 1052235445791

Date of advice: 26 March 2024

Ruling

Subject: CGT - deceased estate and foreign property

Question 1

Did you acquire the repatriated property in 19XX for Capital Gains Tax (CGT) purposes?

Answer 1

Yes

Question 2

Is the repatriated property considered a pre-CGT asset?

Answer 2

Yes

Question 3

Does the disposal of the property give rise to a CGT liability in Australia?

Answer 3

No

This ruling applies for the following period:

1 July XXXX to 30 June XXXX

The scheme commenced on:

1 July XXXX

Relevant facts and circumstances

You were born in Country A.

You are an Australian tax resident.

Your parent owned real estate in City X in Country A.

You were living in City X, with your parents and brothers when World War 2 broke out.

The real estate owned by your parent, was confiscated during the occupation of City X during World War 2.

In XXXX, you parent passed away.

Your parent had a spouse.

Around XXXX, the confiscated property was nationalised and turned over to Country A State ownership.

The Country A Government privatised and sold assets to citizens, the proceeds of the sold assets were not returned to the original owners (nor their heirs), including your surviving parent and their children.

In XXXX, your parent passed away.

In XXXX, you emigrated to Australia with your spouse and children.

In XXXX, the Agency for Restitution (the Agency) in Country A started to return property to the descendants of the pervious property owners.

In XXXX, the Agency advised you that they would return the only remaining, non-privatised assets.

In XXXX, you and your extended family received the assets.

Between XXXX and XXXX, the rental income you received was retained in Country A to cover property expenses and taxes.

In XXXX, a buyer approached you and your family to purchase the land and retail spaces.

In XXXX, the sale was finalised.

In XXXX, you received your share of the sale proceeds. Totalling £XX,XXX.XX, and deposited into a City X bank account.

In XXXX, the Country A Government issued an invoice to you for the CGT payable (approximately £XX,XXX.XX).

In XXXX, you paid the CGT owing to the Country A Government.

In XXXX, the Country A Government issued you a special permission, to transfer the sale proceeds out of Country A.

In XXXX, the balance of the proceeds were transferred to an Australian bank accounting totalling $XXX,XXX.XX AUD).

Relevant legislative provisions

Income Tax Assessment Act 1997 section 128-15

Income Tax Assessment Act 1997 section 128-20

Reasons for decision

Detailed reasoning

Section 128-15 of the Income Tax Assessment Act 1997 (ITAA 1997) sets out the rules regarding the effect of death on a CGT asset that you own just before dying. Subsection 128-15(1) of the ITAA 1997 in conjunction with subsection 128-15(2) of the ITAA 1997 states that if a CGT asset you own just before death devolves to your legal personal representative or passes to a beneficiary in your estate, the legal personal representative or the beneficiary is taken to have acquired the asset on the day you died.

Subsection 128-20(1) of the ITAA 1997 provides, relevantly, that a CGT asset passes to a beneficiary where the beneficiary becomes the owner of the asset under a will or by operation of intestacy law.

In your case, it is accepted that the law or decree under which the CGT asset was purported to be 'nationalised' was declared to be null and void and without effect. The asset is therefore, taken to have been among the assets owned by the deceased at the time of their death and was therefore part of the estate.

Consequently, it is considered that the CGT asset passed to you in your capacity as a beneficiary of the deceased individual's estate. Under section 128-15 of the ITAA 1997, the CGT asset is taken to have been acquired by you on the date of the deceased's death.