Private ruling: Capital gains tax - deceased estates
Date of advice: 3 March 2025
Published: 14 April 2025
Ruling period: Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Can you disregard any capital gain on the transfer of the property to Person A as beneficiary? | A1: Yes. The property will pass to the beneficiary in accordance with paragraph 128-20(1)(d) of the Income Tax Assessment Act 1997 (ITAA 1997) when the Deed of Arrangement is executed. In accordance with subsection 128-15(3) of the ITAA 1997, any capital gain on transfer of the property can be disregarded.

Relevant facts and circumstances: On Date one, the deceased purchased a house(the property). The deceased died intestate several months ago. The relevant court issued a grant of Letters of Administration to the deceased's spouse (Person A) shortly thereafter. Pursuant to the laws of intestacy, Person A is entitled to a fixed sum from the deceased's estate plus a percentage of the remainder of the estate. The remainder of the estate is to be divided between the children of Person A and the deceased. Person A wished to receive a greater share of the estate. The trustee and all the beneficiaries have agreed to enter into a Deed of Family Arrangement (the deed) to settle Person A's claim against the estate. They will sign the deed shortly. Clause 3.1.1 of the deed provides that: the property shall be distributed to Person A in their capacity as beneficiary. Person A will not provide any consideration for the property.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 128-15 | Income Tax Assessment Act 1997 section 128-20