Private ruling: Capital gains tax - deceased estate
Published: March 2013
Ruling period: Year ended 30 June 2013 | Year ended 30 June 2014
Date scheme commenced: 1 July 2012

Ruling: Question and answer: | Will you have a CGT liability as a result of transferring investments in your name, which you held in trust for the beneficiaries, to the names of the respective beneficiaries? | No

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. Person A died after 20 September 1985. You were appointed as executor and trustee of Person A's estate. In their will, Person A bequeathed part of their estate to certain beneficiaries who were minors at the time to be held in trust until they turned 18. You established a separate investment account for each beneficiary. You have been the trustee for the investment accounts of the beneficiaries. Each account has the relevant beneficiary's name. Each beneficiary has their own tax file number and each has been paying tax as appropriate. The beneficiaries are now aged over 18 and you wish to transfer each of the accounts into their respective names.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 102-20. | Income Tax Assessment Act 1997 Subsection 104-75(1) | Income Tax Assessment Act 1997 Subsection 104-75(6) | Income Tax Assessment Act 1997 Division 128.

Reasons for decision: Summary: You make a capital gain or a capital loss if and only if a capital gains tax (CGT) event happens to a CGT asset. Division 128 of the Income Tax Assessment Act 1997 (ITAA 1997) is concerned with deceased estates. CGT event E5 happens if a beneficiary becomes absolutely entitled to a CGT asset of a trust as against the trustee. However, CGT event E5 does not apply to a trust to which Division 128 of the ITAA 1997 applies (subsection 104-75(1) of the ITAA 1997). | Detailed Reasoning - Application to your circumstances: In your case, you will transfer legal ownership (in your capacity as trustee of a testamentary trust) of certain investment accounts to beneficiaries of Person A's estate. As mentioned above, Division 128 of the ITAA deals with deceased estates. As Division 128 of the ITAA 1997 applies in your circumstances, CGT event E5 will not apply. Accordingly there will be no CGT consequences for you on the transfer of the names of the investment accounts which you currently hold in trust for the beneficiaries to the names of the respective beneficiaries.