Capital gains tax - deceased estates

Non-binding edited private advice. This is an edited version of private advice the ATO gave to a specific taxpayer about their own circumstances. You cannot rely on it — it is not binding and provides no protection for anyone else (see PS LA 2008/4). Use it as a guide to the ATO’s thinking, not as authority.

1 Can you disregard any capital gain on the transfer of the property to Person A as beneficiary?

1 Yes. The property will pass to the beneficiary in accordance with paragraph 128-20(1)(d) of the Income Tax Assessment Act 1997 (ITAA 1997) when the Deed of Arrangement is executed. In accordance with subsection 128-15(3) of the ITAA 1997, any capital gain on transfer of the property can be disregarded. This ruling applies for the following periods : Year ending 30 June 20XX Year ending 30 June 20XX The scheme commenced on: 1 July 20XX

On Date one, the deceased purchased a house(the property). The deceased died intestate several months ago. The relevant court issued a grant of Letters of Administration to the deceased's spouse (Person A) shortly thereafter. Pursuant to the laws of intestacy, Person A is entitled to a fixed sum from the deceased's estate plus a percentage of the remainder of the estate. The remainder of the estate is to be divided between the children of Person A and the deceased. Person A wished to receive a greater share of the estate. The trustee and all the beneficiaries have agreed to enter into a Deed of Family Arrangement (the deed) to settle Person A's claim against the estate. They will sign the deed shortly. Clause 3.1.1 of the deed provides that: the property shall be distributed to Person A in their capacity as beneficiary. Person A will not provide any consideration for the property.

Income Tax Assessment Act 1997 section 128-15 Income Tax Assessment Act 1997 section 128-20