Private ruling: Deceased estate
Date of advice: 29 April 2026
Published: 10 August 2026
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: For the purposes of Division 128 of the Income Tax Assessment Act 1997 (ITAA 1997), are you taken to have acquired the property on the date of your parent's death? | A1: Yes. | Q2: Pursuant to Item 1 in the table in section 128-15(4) of the ITAA 1997, is the first element of the cost base of the property for you, your parent's cost base for the asset on the day they died? | A2: Yes. | Q3: Will CGT event A1 occur on the subsequent transfer of a XX% ownership interest in the property from you to your spouse? | A3: Yes.

Relevant facts and circumstances: On DD MM 19XX, your parents purchased the Property as joint tenants. The Property was purchased as an investment to be used solely for rental purposes (until 19YY). No family member resided in the property during the rental period. Your parent (1) died on DD MM 19YY and the surviving parent inherited the property under survivorship. On DD MM 19YY, you and your spouse, moved into the Property, after selling your own residence. You have advised the following: • You paid off the existing mortgage on the Property. • You assumed responsibility for all outgoings, including utilities, council rates, land tax, property insurance and ongoing maintenance. • You have resided in the Property since you moved in in 19YY. • You have never used to Property to derive rental income. Your parent (2) did not compensate you for the cost of any renovations made to the property, these costs have been borne by you and your spouse. Your parent (2) died on DD MM 20YY. Clause 3.1 of your parent's Will, signed and dated DD MM 20YY, provides: 'I give devise and bequeath to my Trustees all my right title and interest in the property situate at and known as the Property in the said State and all my furniture and other articles of household use, ornament of consumption situate therein or thereon at the date of my death upon trust to permit my child to have the use, occupation and enjoyment thereof or the rents therefrom during their lifetime and upon their death to sell the property and divide the net proceeds of such sale equally between my children' On DD MM 20YY the Supreme Court of XXX, Common Law Division, Testators Family Maintenance List, under paragraph 'I' under Other Matters: I. The Court is satisfied that the distribution of the estate of the deceased as effected by the Will of the deceased is such as to not make adequate provision for the property maintenance and support for the plaintiff. The Cout Orders by Consent that: Pursuant to section 91 of the Administration and Probate Act 1958 (the Act), provision for the property maintenance and support of the plaintiff (you) be made out of the deceased's estate. This will operate as a codicil to the Will in accordance with subsection 97(4)(a) of the Act, by the defendant as executor of the estate as follows: (i) transferring the property at XXX, (ii) the transfer is to be carried out by the defendant in his capacity as executor of the estate as soon as practicable; and (iii) the plaintiff forgoes his interest under clause 5 of the Will of the deceased. On DD MM 20YY you were advised by your lawyer that you were now registered on the title for the Property. The correspondence advised that they would proceed with Part 2 of the transaction to get your spouse's name registered on the title. By DD MM 20YY you had transferred XX% of your ownership in the Property to your spouse.

Relevant legislative provisions: Income Tax Assessment Act 1997 Division 128 | Income Tax Assessment Act 1997 section128-15 | Income Tax Assessment Act 1997 subsection 128-15(2) | Income Tax Assessment Act 1997 subsection 128-15(3) | Income Tax Assessment Act 1997 subsection 128-20(1) | Income Tax Assessment Act 1997 subsection 104-10(1) | Income Tax Assessment Act 1997 subsection 104-10(2) | Income Tax Assessment Act 1997 Division 115

Reasons for decision: Summary: Division 128 of the ITAA 1997 operates when a CGT asset owned by a person just before death passes to the deceased's legal personal representative (LPR) or to a beneficiary in the deceased's estate. A CGT asset passes to a beneficiary of a deceased estate when the beneficiary acquires ownership of the asset under a Will of the deceased, or that Will as varied by a court order, under subsection 128-20(1) of the ITAA 1997. According to subsection 128-15(2) the beneficiary is taken to have acquired the asset on the date of the deceased's death. Any capital gain or loss made by the trustee when the asset passes to a beneficiary of the deceased estate is disregarded under subsection 128-15(3) of the ITAA 1997. Therefore, you are taken to have acquired the Property, at date of death of your parent, on DD MM 20YY. | Detailed Reasoning - Question 2: Pursuant to Item 1 in the table in section 128-15(4) of the ITAA 1997, is the first element of the cost base of the property for you is your parent's cost base for the asset on the day they died? | Summary: Yes. Item 1 of subsection 128-15(4) provides that the cost base and reduced cost base of the CGT asset in the hands of the beneficiary that was acquired by the deceased on or after 20 September 1985; is the day the deceased died. Your cost base of the Property is the date of your parent's death, on DD MM 20YY. | Detailed Reasoning - Question 3: Will CGT event A1 occur on the subsequent transfer of a XX% ownership interest in the Property from you to your spouse? | Summary: Yes. Capital Gains Tax (CGT) event A1 - disposal of a CGT asset CGT event A1 occurs when there is a change in ownership of a CGT asset under section 104-10 of the ITAA 1997. Subsection 104-10(1) of the ITAA 1997 provides that CGT event A1 happens if an entity disposes of a CGT asset. A 'disposal', as defined in subsection 104-10(2) of the ITAA 1997, occurs when there is a change of ownership from one entity to another. A 'CGT asset', as provided in section 108-5 of the ITAA 1997, is: • any kind of property, or • a legal or equitable right that is not property. As a consequence of CGT event A1, subsection 104-10(4) provides that you make a capital gain if the capital proceeds from the disposal are more than the assets cost base or conversely you make a capital loss if the capital proceeds are less than the assets reduced cost base. Where on the disposal of an asset no money or property is received, the market value substitution rule contained in section 116-30 of the ITAA 1997 generally applies, such that you are taken to have received the marketvalue of your ownership interest in the property at the time the CGT event occurs. If you sell, transfer or gift property to family or friends for less than it is worth, you'll be treated as if you received the market value of the property for CGT purposes. You use the market value of a property to calculate your CGT if both of the following are true: • what you received was more or less than the market value of the property • you and the new owner were not dealing with each other at arm's length. This is called the market value substitution' rule. Under Division 115 of the ITAA 1997, an entity may be eligible for a discount on CGT assets where they meet the relevant criteria, including holding the asset for longer than 12 months. In your case, you inherited the Property from your parent's deceased estate, by Court Order. Subsequent to the Property title being transferred to you, you then transferred XX% of your ownership interest to your spouse. Therefore, the transfer of your XX% ownership interest in the Property to your spouse triggered a CGT event A1. You will need to calculate any gain or loss based on the market value at the time of transferring your XX% ownership in the Property to your spouse. As you have owned the Property for longer than 12 months, you are also entitled to the 50% CGT discount in relation to the Property.