Private ruling: Capital gains tax - disposal - cost base
Date of advice: 21 April 2016
Published: June 2016
Ruling period: Year ending 30 June 2015 | Year ending 30 June 2016
Date scheme commenced: 1 July 20XX

Ruling: Q1: When you dispose of post CGT land, will the first element of the cost base be the market value of the land on the date of the deceased's death? | A1: No.

Relevant facts and circumstances: You are the executor of the estate. The deceased died in the 20XX-XX financial year. The deceased purchased multiple lots of land spread over multiple titles in the 20YY-YY financial year. Two lots which were vacant lots, and not on the same title as the main residence, have been sold in the relevant financial year and the subsequent financial year.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 128-15.

Reasons for decision: Summary: If you acquire an asset owned by a deceased person as their legal personal representative or beneficiary, you are taken to have acquired the asset on the day the person died. If that person died before 20 September 1985, you disregard any capital gain or capital loss you make from the asset. If you acquire an asset owned by a deceased person as their legal personal representative or beneficiary, you are taken to have acquired the asset on the day the person died. If that person died before 20 September 1985, you disregard any capital gain or capital loss you make from the asset. Under section 128-15 of the Income Tax Assessment Act 1997 , if a deceased person acquired their asset on or after 20 September 1985, the first element of your cost base and reduced cost base is taken to be the deceased person's cost base and reduced cost base of the asset on the day the person died, unless: • you are the trustee of a Special Disability Trust, or • the asset was the deceased person's main residence and certain other conditions apply. If the deceased person died on or after 21 September 1999, you cannot use the indexation method; and when you dispose of the asset, you must recalculate the first element of your cost base to leave out any indexation that was included in the deceased's cost base. Therefore in your case as the deceased purchased their assets after 20 September 1985, and you are not the trustee of a special disability trust, and the assets in question were not the deceased person's main residence then the first element of the cost base for the assets are taken to be the deceased person's cost base and reduced cost base on the day the person died.