Private ruling: Capital gains tax
Published: March 2015
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Will a capital gains tax (CGT) event occur when the shares are transferred to you from the estate? | A1: No.

Relevant facts and circumstances: You are a resident of Australia for tax purposes. Your relative (the deceased) is a non-resident for tax purposes. The deceased passed away in relevant year. The deceased held taxable Australia property (shares and bank accounts). Withholding tax was paid by the financial institutions from the date of death. All shares and bank accounts were transferred to you in subsequent year. No shares have been sold.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 subsection 109-5(1) | Income Tax Assessment Act 1997 section 120-20

Reasons for decision: Summary: Special CGT rules apply to the transfer of any CGT assets from a deceased estate. When a person dies, the assets that make up their estate can either pass directly to: • a beneficiary (or beneficiaries), or • their legal personal representative (for example, their executor) who may dispose of the assets or pass them to the beneficiary (or beneficiaries). A beneficiary is a person entitled to assets of a deceased estate. They can be named as a beneficiary in a will, or they can be entitled to the assets as a result of the laws of intestacy (when a person dies without having made a will). | Detailed Reasoning - Disregarding a capital gain or loss on death: As a general rule, CGT applies to any change of ownership of a CGT asset, unless the asset was acquired before 20 September 1985 (pre-CGT). There is a special rule that allows any capital gain or capital loss made on an asset acquired on or after that date (a post-CGT asset) to be disregarded if, when a person dies, an asset they owned passes either: • to their legal personal representative or to a beneficiary, or • from their legal personal representative to a beneficiary. For Australian resident beneficiaries, the rules are the same, regardless of whether the deceased estate is in Australia or overseas. In your case, you have acquired shares from a deceased estate. As discussed, there will be no CGT consequences when the shares transferred to you from the deceased estate.