Private ruling: Capital gains or losses of a deceased's estate
Date of advice: 5 July 2017
Published: September 2017
Ruling period: Year ending 2013 | Year ending 2014 | Year ending 2015 | Year ending 2016
Date scheme commenced: 1 July 2012

Ruling: Q1: Can the Trustee for of the deceased estate disregard any net capital loss when assets are transferred from the estate to the beneficiary? | A1: Yes

Relevant facts and circumstances: A was married to B and together they had a child C. A passed away in mid-late 201X (deceased). The deceased left all real and personal property to the spouse. The spouse was the sole executor and beneficiary of the deceased's estate. The assets of the deceased's estate included real and personal property. Probate of the estate was granted on DDMMYY. The deceased's spouse passed away in mid 201Y. The deceased's spouse originally left the real and personal property of the estate to the child of the marriage of A and B. The Will of the deceased's spouse was amended by a Codicil in early-mid 201Y and made provision for a sum of cash to be left to other beneficiaries in equal shares and the residual of the estate to the child of the marriage. Probate of the deceased's spouse estate was granted in late 201Y. In the deceased's spouse probate application made to the court, assets from the estate of A were included in the inventory of property. A capital loss was made on the transfer of the assets from the deceased's estate to the beneficiary, being the deceased's spouse's estate.

Relevant legislative provisions: Income Tax Assessment Act section128-10 | Income Tax Assessment Act section 128-15. | Income Tax Assessment Act section 128-20

Reasons for decision: Summary: When you die any capital gain or loss from a CGT event that happens to a CGT asset that you owned just before dying is disregarded, unless your beneficiary is an exempt entity, a complying superannuation entity or a foreign resident. A special rule applies for a legal personal representative to the effect that any capital gain or loss that a legal personal representative makes if an asset passes to a beneficiary of a deceased estate is disregarded. In your case, the beneficiary of A's estate is B's estate. B's estate is not an exempt entity, a complying superannuation fund or a foreign resident. Therefore, any capital loss made when the assets held by A, just before dying, that are passed through their estate to the estate of B, is disregarded.