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_DAH111(Newbie)Newbie
21 June 2021

My brother and I have been left equal shares of my deceased fathers estate. I am uk born but an australian citizen, my brother and the estate is in the UK. I understand that my share of the inheritance can be received by me into Australia without tax implications (IHT has been paid in the UK).

My brother has requested my permission to allow him to use the proceeds of the whole estate to purchase a new house before he sells his current house and then return my 50% share of the inheritance once he has sold his current house in say 6 months. In principle I have no issue with this but my concern is whether the money he will transfer to me later is still classified as inheritance for australian tax purposes.

So, my query is (if this all makes sense); will the transfer to me of my share of the inhertiance after the sale of his property still be classified as inheritance for australian tax purposes? Or, if the estate has been wholly distributed to him when finalised, will the 'classification' of the money he later transfers to me change and no longer be deemed as inhertitance and potential subject to tax implications?

Also, what documentation/evidence is required to show the ATO the money I receive is inheritance? (based on either scenario)

19,627 views
3 replies
19,627 views
3 replies

Most helpful response

Most helpful reply

JodieR_ATO(Community Support)Community Support
22 June 2021

Hi @DAH111,

If you have received an inheritance by way of shares you may have reporting requirements in Australia. The website advises - If you're a beneficiary or legal personal representative, you acquire the asset on the day the person died. Capital gains tax (CGT) does not apply when you acquire the asset, it may apply if you later dispose of the asset. The date of the person's death may be relevant when you calculate the capital gain.

If you are gifting the shares/asset to your brother this would be seen as a disposal and a CGT event, you would also need to declare CGT event in the financial year the disposal took place. If you paid tax overseas you can also apply for a foreign income tax offset.

If your brother later gifts you cash, you do not need to declare this amount. Gifts of cash are not looked at for tax purposes.

Please use the links for further assistance.

All the best.

All replies

Most helpful reply

JodieR_ATO(Community Support)Community Support
22 June 2021

Hi @DAH111,

If you have received an inheritance by way of shares you may have reporting requirements in Australia. The website advises - If you're a beneficiary or legal personal representative, you acquire the asset on the day the person died. Capital gains tax (CGT) does not apply when you acquire the asset, it may apply if you later dispose of the asset. The date of the person's death may be relevant when you calculate the capital gain.

If you are gifting the shares/asset to your brother this would be seen as a disposal and a CGT event, you would also need to declare CGT event in the financial year the disposal took place. If you paid tax overseas you can also apply for a foreign income tax offset.

If your brother later gifts you cash, you do not need to declare this amount. Gifts of cash are not looked at for tax purposes.

Please use the links for further assistance.

All the best.

Liked by knaresbro
_DAH111(Newbie)Newbie
22 June 2021

Hi Jodie,

Thanks for your reply.

To further clarify there are no 'shares', wrong terminology by me, my reference was to an equal distribution of the estates final cash assets. The estate currently consists of cash assets and a property which is currently in the process of being sold, if it makes any difference the property was originally purchased prior to 1985. IHT has been paid in the UK and there may be a small gain in the property sale since this has been paid which will be declared through a Trustee Tax Return in the UK to determine if UK CGT is applicable on the gain, it is not expected to be as it is most likely to be below the UK CGT threshold.

The final value of the estate is estimated to be GBP 600k in cash, if I 'gift' my equal share to my brother how is a capital gain applicable to me and what is determined/calculated to identify the value of the gain? I have followed the links and like most laypersons find it hard to understand the some of the terminology used and what actually applies to me in this unusual scenario.

Thanks in advance.

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