Private ruling: CGT - deceased estates
Date of advice: 8 November 2023
Published: 18 December 2023
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Did a capital gains tax (CGT) event happen to you on the transfer of a XX% interest in the Property to Person D? | A1: No.

Relevant facts and circumstances: Person A (the Deceased) and Person B (their spouse) purchased the Property after 19 September 1985. The Deceased became the sole owner of the Property after Person B passed away. The Deceased died on XX/XX/20XX. The Deceased's adult children Person C and Person D are executors of the Estate of the Deceased. Person C and Person D are also beneficiaries of the Estate. In accordance with the Deceased's will, the beneficiaries were to receive the Estate in equal shares as tenants in common. Probate was granted in the year following the death of the Deceased. A Deed of Family Arrangement was completed shortly afterwards. The parties to the Deed of Family Arrangement were Person C and Person D as executors of the Estate (the Trustees) and Person C and Person D in their capacity as residual beneficiaries. The details of the Deed of Family Arrangement include: • The Trustees obtained a valuation of the Property and agreed on a market value following valuation. • The Trustees shall transfer the property to the purchaser as follows: (i) Firstly, as to a specified portion of the property in specie (ii) Secondly, the balance remaining upon payment to the Trustees of the remaining portion of the valuation Sum • The transfer of the Property and payment was to occur within XX days from the date of the Deed. Person D paid the relevant amount to the Estate in accordance with the Deed. The Property was transferred from the Trustees to Person D shortly thereafter.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10

Reasons for decision: Summary: A CGT event did not happen to you on the transfer of a XX% interest in the Property to Person D as the owner of the Property at the time of the transfer was the Estate. | Detailed Reasoning - Detailed reasoning: You dispose of a CGT asset if a change of ownership occurs from you to another entity, whether because of some act or event or by operation of law. The time of the event is when you enter into the contract for the disposal. If there is no contract, the time of the event is when the change of ownership occurs. | Detailed Reasoning - Application to your circumstances: The Trustees of the Estate entered into a Deed of Family Arrangement to transfer XX% of the Property to Person D on payment of a specified amount from them. At the time of the transfer of the Property, the owner was the Estate of the Deceased. Therefore, a CGT event did not happen to you on the transfer of the ownership interest in the Property to Person D.