Private ruling: Capital gains tax
Published: December 2013
Ruling period: Year ending 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Will any capital gains or losses made from the transfer of assets to gift deductible gift recipients be disregarded under subsection 118-60(1) of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes

Relevant facts and circumstances: The deceased was an Australian resident for tax purposes at the time they passed away. Pursuant to the terms of their will, the residue of the deceased's estate is to be distributed in equal shares to deductible gift recipients. The residue of the estate consists of real property located in Australia and listed Australian shares.

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

Reasons for decision: Summary: Under subsection 118-60(1) of the ITAA 1997, a capital gain or loss made from a testamentary gift of property is disregarded if the gift would have been deductible under section 30-15 of the ITAA 1997 had it not been a testamentary gift. Subsection 30-15(1) of the ITAA 1997 provides that entities can deduct a gift in the situations set out in the table in section 30-15. The table sets out who the recipient of the gift can be, the type of gift you can make, how much you can deduct and any special conditions that apply. In this case, both of the residual beneficiaries are deductible gift recipients and a CGT event happens on the executor disposing of the property and shares to them. However, the deceased would have been entitled to a deduction under section 30-15 of the ITAA 1997 for the gifts of property and shares had they been made during their lifetime because: · the gift was made to a deductible gift recipient that was in Australia; and · for that deductible gift recipient there were no gift conditions affecting the types of deductible gifts it could receive that needed to be satisfied. Accordingly, any capital gains or losses made from the disposal are disregarded under subsection 118-60(1) of the ITAA 1997.