Private ruling: Capital gains tax
Date of advice: 15 April 2026
Published: 29 June 2026
Ruling period: Year ended 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Are you required to pay capital gains tax on the proceeds you received on the transfer of your share of your parent's property to your relative? | A1: No.

Relevant facts and circumstances: Your parent passed away a few years ago. Your parent had a share in the property. Your parent purchased the property with your relative. Your parent bequeathed you a portion of their ownership in the property under their will with the remaining portion going to your relative. Your parent's will gave your relative the option to purchase your share of the inheritance for its market value within a period of time after their passing. You agreed to sell your share of the property to your relative for less than the market value. Your share of the property was transferred to your relative. The ownership interest was never in your name as beneficiary and was transferred from the Estate of your parent into your relatives name directly.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 128-15 | Income Tax Assessment Act 1997 section 128-20

Reasons for decision: Summary: Division 128 of the Income Tax Assessment Act 1997 (ITAA 1997) deals with the capital gains tax (CGT) consequences that arise from a deceased estate. Under section 128-10 of the ITAA 1997, when a person dies, any capital gain or capital loss that results from a CGT asset the person owned just before dying devolving to their legal personal representative or that pass to a beneficiary is disregarded. The term 'legal personal representative' (LPR) is defined in subsection 995-1(1) ITAA 1997 and relevantly includes, 'an executor or administrator of an estate of an individual who has died...' For Australian tax purposes, the Commissioner treats a LPR such as an executor or administrator as a trustee and will treat the deceased estate as a trust estate. Any CGT consequences are deferred until there is a subsequent disposal by the LPR or beneficiary. Subsection 128-15(3) of the ITAA 1997 states that any capital gain or loss the legal personal representative of a deceased estate makes if an asset 'passes' to a beneficiary in the estate is disregarded. Section 128-20 of the ITAA 1997 lists the ways in which an asset is considered to pass to a beneficiary of an estate. The most common of the ways mentioned is where the beneficiary becomes the owner of the asset under the will. In your case you inherited an interest in the property from your parent. The share of the property did not transfer to you under the will. The share of the property was transferred directly from your parent's estate to your relative. Your relative paid you for your share of the property. As your share in the property did not transfer directly from your parent's estate into your name and then transfer from you to your relative you are not required to pay capital gains tax on the amount you received for the purchase of your share of the property. The CGT liability for your share of the property lies with the estate and not you as an individual.