Private ruling: CGT - deceased estate
Date of advice: 1 December 2023
Published: 29 January 2024
Date scheme commenced: X July 20XX.

Ruling: Q1: Are you entitled to a CGT discount relating to the disposal of the Property for the period of ownership prior to8 May 2012? | A1: Yes. You are eligible for a CGT discount for your ownership period prior to 8 May 2012. You may use the market value of the CGT asset to quantify any discount capital gain as per subsection 115-115(4). | Q2: Are you entitled to a CGT discount relating to the disposal of the Property for the period of ownership after8 May 2012? | A2: No. This private ruling applies for the following period: Year ended X June 20XX. The scheme commenced on: X July 20XX.

Relevant facts and circumstances: The Property was purchased in 19XX by four owners as tenants in common. All four original owners were non-residents of Australia for their entire ownership period. In 19XX, A passed away. In 20XX, B passed away. In 20XX, C passed away. In 20XX, due to administrative errors regarding the grant of probate, you became the sole owner of the Property. You subsequently sold the Property in 20XX. You were a non-resident of Australia for your entire ownership period.

Relevant legislative provisions: Income Tax Assessment Act section 115-30 | Income Tax Assessment Act section 115-105 | Income Tax Assessment Act section 115-115

Reasons for decision: Summary: You are eligible for a CGT discount for your ownership period prior to 8 May 2012. You may use the market value of the CGT asset to quantify any discount capital gain as per subsection 115-115(4). | Detailed Reasoning - Detailed reasoning: Foreign or temporary residents are not eligible to apply the full 50% discount to assets acquired after 8 May 2012. You can only apply the discount to part of your capital gain in either of the following scenarios: • you acquired the asset on or before 8 May 2012 • you had a period of Australian residency after 8 May 2012. Division 115 of the ITAA 1997 outlines when an entity may be entitled to a discount capital gain. Sections 115-105 and 115-115 operate to calculate the capital gain discount percentage available to non-residents. Subsection 115-115(2) relates to testing periods that commence after 8 May 2012. The discount percentage is calculated out using the following formula: Number of days during discount testing period that you | Detailed Reasoning - were an Australian resident (but not a temporary resident): 2 x Number of days in discount testing period For taxpayers that were a foreign or temporary resident during all of the discount testing period the percentage will be 0%. Subsection 115-115(4) outlines the 'market value' method to calculate the discount percentage for non-residents for testing periods prior to 8 May 2012. Paragraph 115-115(4)(d) calculates the unrealised capital gain as of 8 May 2012. This is referred to as the 'excess'. If the excess is equal or greater than the discount capital gain, than the standard 50% discount applies (Item 1 of the table). If the excess is less than the discount capital gain, than the discount percentage is worked out under subsection 115-115(5). For taxpayers who do not (or cannot) choose the market value method in subsection 115-115(4), the discount percentage is calculated using the formula in subsection 115-115(6). As with subsection 115-115(2), the percentage will be 0% for taxpayers that were a foreign or temporary resident during all of the discount testing period. Item 4 of the table in section 115-30 instructs the beneficiary of a deceased individual's estate to treat the acquisition date of a pre-CGT asset as the date the deceased originally acquired the asset. | Detailed Reasoning - Question 1: As the Property was passed to you as the acquirer by the deceased's estate, your acquisition date of the Property is X/XX/XXXX. This is the date the deceased originally acquired the asset, as per item 4 of section 115-30 of the ITAA 1997. Accordingly, you have a discount testing period from that date to 8 May 2012. You can use the 'percentage using market value' method in subsection 115-115(4) of the ITAA 1997 to calculate what percentage of CGT discount is afforded to you. In order to use this method, you require the market value from around the time of 8 May 2012. If the 'excess' from 115-115(4)(d) on 8 May 2012 is equal to or greater than the capital gain made at the time of sale, then the discount percentage is 50%. If the excess, however, is less than the capital gain made at time of sale, then the discount is worked out under subsection (5). | Detailed Reasoning - Question 2: Additionally, you have a discount testing period from 8 May 2012 to the date of disposal in 20XX. As you were a non-resident for that entire discount testing period, the percentage of capital gain discount you are afforded during this time period is 0%.