Private ruling: Capital gains tax - deceased estate - family trust
Date of advice: 13 November 2015
Published: January 2016
Ruling period: Year ending 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Will any capital gain or capital loss be disregarded when a Capital gains tax (CGT) event happens on the transfer of an asset from the trust to an individual as a result of another individual dying? | A1: No.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 104-10 | Income Tax Assessment Act 1997 Section 128-10 | Income Tax Assessment Act 1997 Section 128-15 | Income Tax Assessment Act 1997 Section 128-20.

Reasons for decision: Summary: Division 128 does not apply to Family Trusts per se; rather it applies to the passing of an asset from the legal personal representative (ie executors) to a beneficiary of the deceased person's estate provided that the asset was owned by the deceased at the time of their death. Sections 128-10 and 128-15 of the ITAA 1997 provide that when a person dies any capital gain or capital loss that results from CGT assets they owned just before their death can be disregarded. This is provided that the CGT assets either devolve to their legal personal representative or pass to beneficiaries in their estate under the terms of the will. In your situation, the deceased's provided an interest in a property to relative 'C'. This property was not owned by the deceased as at their date of death. Therefore the transfer of the title does not fall for consideration under Division 128 of the ITAA 1997. As the property was not owned by the deceased at their date of death, CGT cannot be disregarded by application of Division 128.

Relevant facts: The deceased was a beneficiary and had effective control of a family trust (Trust). | The Trust owned two properties, one was acquired prior to 19 September 1985 (property A) and another property (property B) acquired a number of years later. | The deceased left in their will, property B to relative, (C).