Private ruling: Capital gains tax - deceased estate
Date of advice: 21 December 2020
Published: March 2021
Ruling period: Year ended 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will a capital gains tax (CGT) event occur because the shares are transferred to an exempt entity? | A1: Yes. CGT event K3 will occur as the deceased owned a CGT asset prior to their death and the asset will pass to a tax advantaged entity. | Q2: Will any capital gain made as a result of the transfer of the shares to the tax-advantaged entity be disregarded? | A2: Yes. As the deceased would have been entitled to a deduction for the gift of the shares to the deductible gift recipient (DGR) if that gift had been made prior to their death, any capital gain or capital loss made from the transfer of the shares to the DGR will be disregarded.

Relevant facts and circumstances: The deceased died in 20XX. The deceased's will provided that the will's residue will be distributed to entity R, an income tax exempt entity and a DGR. Some of the shares in the portfolio are pre-CGT, but a majority are post-CGT. All the shares will be transferred to entity R in-specie. Probate has also been granted.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 30-15 | Income Tax Assessment Act 1997 section 104-215 | Income Tax Assessment Act 1997 section 118-60