Private ruling: CGT - deceased estate
Date of advice: 22 September 2025
Published: 10 November 2025
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Did the Legal Personal Representative (LPR) acquire the 50% ownership interest in the property on the day the deceased died under subsection 128-15(2) of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. As the property was transferred to the Legal Personal Representative (LPR) of the deceased's estate before it was transferred to the beneficiary, (Beneficiary 1), the LPR is taken to have acquired the property on the day the deceased died under subsection 128-15(2) of the ITAA 1997. | Q2: If the answer to question 1 is yes, did the X% ownership interest in the property held by the LPR pass to Beneficiary 1, under the Deed Altering Entitlement, in accordance with sub paragraphs 128-20(1)(d)(i) and (ii) of the ITAA 1997? | A2: Yes. Division 128 of the ITAA 1997 contains rules that apply when an asset owned by a person just before they die passes to their legal personal representative or to a beneficiary of a deceased estate. Under subsection 128-20(1) of the ITAA 1997, an asset passes to a beneficiary in a deceased estate if the beneficiary becomes the owner of the asset: (a) under your will, or that will as varied by a court order; or (b) by operation of an intestacy law, or such a law as varied by a court order; or (c) because it is appropriated to the beneficiary by your legal personal representative in satisfaction of a pecuniary legacy or some other interest or share in your estate; or (d) under a deed of arrangement if: (i) the beneficiary entered into the deed to settle a claim to participate in the distribution of your estate; and (ii) any consideration given by the beneficiary for the asset consisted only of the variation or waiver of a claim to one or more other CGT assets that formed part of your estate. Beneficiary 1 acquired an additional X% ownership interest in the Property through the deed altering entitlement. The deed altering entitlement was entered into to settle a claim to participate in the distribution of the deceased estate and there was no consideration given for the transfer. In addition, there was no waiver of a claim to any other CGT assets within the estate. Therefore, the requirements of paragraph 128-20(1)(d) of the ITAA 1997 are satisfied and the X% ownership interest in the Property passed to Sam as a beneficiary in the Estate. | Q3: If the answer to question 1 is yes, did the X% ownership interest in the property held by the LPR pass to Beneficiary 1, under the deceased's will in accordance with paragraph 128-20(1)(a) of the ITAA 1997? | A3: Yes. Beneficiary 1 acquired the X% ownership interest in the property pursuant to the deceased's Will. Therefore, the requirements of paragraph 128-20(1)(a) of the ITAA 1997 are satisfied, and the 12.5% ownership interest in the Property passed to Beneficiary 1 as a beneficiary in the Estate. | Q4: If the answer to questions 2 and 3 are yes, is any capital gain or capital loss made by the LPR on the transfer of the total 50% ownership interest held in the property to Beneficiary 1 under the will and Deed Altering Entitlement disregarded under subsection 128-15(3) of the ITAA 1997? | A4: Yes. Under subsection 128-15(3) of the ITAA 1997, any capital gain or capital loss that the legal personal representative makes if an asset passes to a beneficiary is disregarded. The total 50% ownership interest in the estate asset (being the property) passed to Beneficiary 1 for the purposes of Division 128 of the ITAA 1997 as explained at questions 2 and 3. Therefore, any capital gain or capital loss made by the LPR can be disregarded under subsection 128-15(3) of the ITAA 1997.

Relevant facts and circumstances: In late 20XX the deceased passed away. In early 20XX, an Australian property (the property) was purchased. At the time of acquisition, the deceased's name was included on the property title as a X% tenant in common with their child, (Beneficiary 1) owning the remaining percentage of the property. This arrangement was undertaken solely to assist Beneficiary 1 in securing loan finance. The deceased did not make any financial contributions towards the purchase price, mortgage repayments, property outgoings, or capital improvements. Since acquisition, the property was solely used, managed, and controlled by Beneficiary 1. The deceased neither resided in the property nor derived any income from it. Beneficiary 1 occupied the property as their principal place of residence for the entirety of the ownership period. Deceased's Will and Deed Altering Entitlement The Will of the deceased appointed the Public Trustee as the executor and Trustee of the Estate. The Will also left all of the deceased's property (after payment of estate liabilities) to their children (Beneficiary 1, Beneficiary 2, Beneficiary 3, and Beneficiary 4) who survive the deceased. Following the deceased's passing, in late 20XX the executor and all the above listed beneficiaries named in the Will of the deceased executed a Deed Altering Entitlement (the Agreement). The Agreement formally acknowledged that the deceased did not hold any beneficial interest in the property and that Beneficiary 1 had been the sole beneficial owner since the time of acquisition. Under clause X of the Agreement, the other listed beneficiaries of the property under the terms of the deceased's Will (Beneficiary 2, Beneficiary 3, and Beneficiary 4) agreed to disclaim any and all interest each of them have in the estate property pursuant to the Will and have requested that the Public Trustee transfer the entire X% ownership interest in the property to Beneficiary 1 absolutely, on the terms set out in the agreement. Clause X of the Agreement provides that the Public Trustee has calculated the fees and liabilities in connection to the administration of the Estate (Estate Liabilities) to total $X (which Beneficiary 1 was to pay before transfer of the deceased's entire X% ownership interest occurred). Clause X of the agreement provides that by Beneficiary 1 discharging the deceased's interest in the mortgage on the estate property (to the effect that on the settlement of the transfer of the entire X% ownership interest in the estate property to Beneficiary 1 pursuant to the terms of the agreement), the deceased or the estate will no longer appear on the mortgage or title of the property. Clause X of the agreement provides that the settlement of the estate property is to occur as follows: • Transfer X% of the estate property to Beneficiary 1 in accordance with the deceased's Will (effectively X% of the X% ownership interest = X% of the estate property). • Transfer X% of the estate property to Beneficiary 1 and not in conformity with the terms of the deceased's Will (effectively X% of the X% ownership interest = X% of the estate property) In accordance with the agreement, the legal title to the X% ownership interest in the estate property was subsequently transferred to Beneficiary 1 in late 20XX, thereby making Beneficiary 1 the sole legal and beneficial owner of the property from this point. The deceased's X% ownership interest in the property was transferred to the Legal Personal Representative (LPR) of the deceased's estate before it was transferred to Beneficiary 1.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 128-15(2) | Income Tax Assessment Act 1997 subsection 128-15(3) | Income Tax Assessment Act 1997 paragraphs 128-20(1)(a) | Income Tax Assessment Act 1997 subparagraphs 128-20(1)(d)(i) and (ii)