Private ruling: Capital gains tax - deceased estate and cost base of shares
Published: July 2011
Ruling period: 30 June 2011
Date scheme commenced: 1 July 2010

Ruling: Q1: Is the first element of the cost base of the shares you acquired from a deceased estate the deceased's cost base or reduced cost base? | A1: Yes.



Reasons for decision: Summary: While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision. | Detailed Reasoning - Deceased estate: If you acquire an asset owned by a deceased person as their legal representative or beneficiary, you are taken to have acquired the asset on the day the person died. If the deceased 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. In your case, you are taken to have acquired the shares on the deceased's date of death for either the deceased's cost base or reduced cost base. | Detailed Reasoning - Keeping records: You must keep records of every act, transactions, event or circumstance that may be relevant to working out whether you have made a capital gain or capital loss from a CGT event. | Detailed Reasoning - Records relating to shares in companies: Most of the records you need to keep regarding your disposal of shares in companies will be given to you by the company or your stockbroker. It is important to keep everything they give you on your shares. These records will generally provide the following important information: · the date of purchase of the shares · the amount paid to purchase the shares · details of any non-assessable payments made to you during the time you owned the shares · the date and amount of any calls if shares were partly paid · the sale price if you sell them, and · any commissions paid to brokers when you buy and sell them. In your case, you have been unable to establish what the deceased's cost base of the shares they acquired from 1996 to their date of death in 2010, as you have been unable to locate any records relating to the acquisition of these shares as the deceased had no dependants. From the extensive research you have undertaken you have only been able to establish the number of and acquisition dates of the shares the deceased acquired but not the purchase price. As the cost of a share can increase and decrease on any particular day that the share is traded on a stock exchange, as you do know what was paid by the deceased to acquire their shares we consider that the cost base that should be used is the lowest price that the share traded for on the date the deceased acquired the share.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns. | Relevant facts: The deceased acquired a large number of shares in various companies from 1996 to their date of death. | The deceased died during 2010. | The deceased has no dependants. | You are unable to locate any records relating to the acquisition of the shares, as the deceased does not have any dependants. | You have gathered information in relation to the deceased's share holdings such as the number of shares acquired and the date of acquisition from the various companies' corresponding share registries. | You have not been able to establish the deceased's cost base of the shares. | You have undertaken extensive research into the market value of the shares on the various acquisition dates for all the different company share holdings. | You sold all the shares in the 201X-1X income tax year. | You intend using the market value of the share/s on the date the deceased acquired them as the cost base.