Can the legal personal representative or the beneficiary of a deceased estate use an average cost when working out the acquisition cost of shares?
No. This ruling applies for the following periods : Year ending 30 June 20XX Year ending 30 June 20XX The scheme commenced on: 1 July 20XX
The deceased acquired a significant number of shares during their lifetime. The share portfolio is made up of shares in a number of different publicly listed companies. All of the shares were acquired after September 1985. The deceased had acquired shares in the same publicly listed companies at different times with different costs. You can identify the dates and the cost of each purchase. The shares are held in the Chess System and listed on the ASX. You are able to obtain Holding statements for the shares. The majority of the shares are ordinary shares. A minor amount of shares are preference shares. All rights attached to these shares for the same share are equal. Some of the shares will be disposed of by the Estate and some will transfer to the beneficiaries.
Income Tax Assessment Act 1997 section 104-10 Income Tax Assessment Act 1997 subsection 104-10(1) Income Tax Assessment Act 1997 section 128-10 Income Tax Assessment Act 1997 section 128-15 Income Tax Assessment Act 1997 subsection 128-15(2) Income Tax Assessment Act 1997 subsection 128-15(4) Income Tax Assessment Act 1997 section 128-20 Income Tax Assessment Act 1997 subsection 128-20(1)
Capital Gains Tax (CGT) event A1 happens if you dispose of a CGT asset (subsection 104-10(1) of the Income Tax Assessment Act 1997 (ITAA 1997). 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. Division 128 sets out what happens when a CGT asset passes to you as a beneficiary of a deceased estate. Section 128-20(1) provides that an asset is taken to have passed to a beneficiary when the beneficiary becomes the owner of the asset in any of the following circumstances: • under a Will or a Will varied by court order • by operation of intestacy law • by appropriation to a beneficiary • under a Deed or arrangement. The beneficiary will be taken to acquire the asset that passes to them on the date the deceased died (subsection 128-15(2) of ITAA 1997). Subsection 128-15(4) of ITAA 1997 sets out the modifications to the cost base and reduced cost base of CGT asses that pass to you as a beneficiary of a deceased estate.
Item 1 of the table in subsection 128-15(4) of ITAA 1997 provides that the cost base or reduced cost base of shares that pass to you as a beneficiary of a deceased estate that they acquired on or after 20 September 1985 will be the deceased's cost base of the shares on the date they died. CGT Determination 33 TD 33: Capital Gains: How do you identify individual shares within a holding of identical shares? states: 1. Where a disposal of shares occurs and those shares are able to be individually distinguished e.g. by reference to share numbers or other distinctive rights or obligations attached to them, those shares are identifiable; their date of acquisition and cost base will be a matter of fact. In your case the date of acquisition and cost base is a matter of fact. You will use the deceased's cost base at the date of their death. You are not able to use an average cost as per TD 33.