Private ruling: CGT - deceased estate - asset passing to tax - advantaged entity
Date of advice: 10 February 2026
Published: 30 March 2026
Ruling period: Year ending 30 June 20XX
Date scheme commenced: DD M 20XX

Ruling: Q1: Does capital gains tax (CGT) event K3 occur upon the in-specie transfer of the shares to a beneficiary, under the provisions of the Will, when the beneficiary in question is an exempt entity under Division 50 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. CGT event K3 in section 104-215 of the ITAA 1997 happens if a taxpayer dies and a CGT asset the taxpayer owned just before dying passes to a beneficiary of the taxpayer's estate which (when the asset passes) is a tax-advantaged entity. The Society is an exempt entity registered with the Australian Charities and Not-for-profits Commission. An exempt entity is an entity whose ordinary and statutory income is exempt from income tax because of Division 50 of the ITAA 1997. Under subsection 104-215(3) of the ITAA 1997, CGT event K3 is taken to happen just before the deceased's death. Unless a CGT exemption applies, the trustee of the estate must include in the date of death return any net capital gain for the income year when the deceased died (section 104-215(4) of the ITAA 1997). | Q2: Will any CGT event K3 capital gains resulting from the in-specie transfer of shares to the Deductible Gift Recipient, be disregarded in the date of death return under subsection 118-60(1) of the ITAA 1997, as the transfer of shares would have been deductible under section 30-15 of the ITAA 1997 if it had not been a testamentary gift? | A2: Yes. Under section 30-15 of the ITAA 1997 if the assets had been gifted during the deceased's lifetime, the deceased would have been entitled to a deduction for the gift of the shares. Under subsection 118-60(1) of the ITAA 1997, a capital gain or capital loss from a testamentary gift of property is disregarded if the gift would have been deductible under section 30-15 of the ITAA 1997. Therefore, any capital gains or losses made from CGT event K3 happening when the shares passed to the Society in accordance with the deceased's Will, are disregarded under subsection 118-60(1) of the ITAA 1997.

Relevant facts and circumstances: The deceased passed away on DD M 20XX. Probate was granted on DD M 20XX. The residue of the estate included listed shares. The Will provided that the residue of the estate was to be distributed to the Society. A distribution was made in accordance with the Will through an in-specie share transfer to the Society on DD M 20XX. The Australian Government Australian Business Register ABN Lookup tool confirms that the Society is: • registered with the Australian Charities and Not-for-profits Commission as a charity • exempt from income tax • endorsed as a Deductible Gift Recipient.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 30-15 | Income Tax Assessment Act 1997 Division 50 | Income Tax Assessment Act 1997 section 104-215 | Income Tax Assessment Act 1997 subsection 104-215(3) | Income Tax Assessment Act 1997 subsection 104-215(4) | Income Tax Assessment Act 1997 subsection 118-60(1)