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CGT on shares aquired pre 85 from deceased estate via another deceased estate

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My rather aquired shares pre 1985. On his death they transferred to my mother. On her subsequent death they transferred to me. All off-market transfers under relevant will provisions.

When I sell these shares:

Are they CGT exempt as they were aquired pre 85 and have not been traded since; or

Do they have the cost base that my mother would have incurred had she sold them ie value at date of father's death; or

Do they have the cost base of market value at mother's date of death.

Many thanks.

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Replies 2

Hi @Chrissie,

 

Thank you for reaching out to us. When shares are sold or disposed of this is deemed a Capital Gains tax event. 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.

 

CGT will apply if the asset is transferred under the will to a tax-advantaged entity (such as a charity), or to a foreign resident. You must report this in the person's date of death tax return.

 

If the deceased person acquired the asset before 20 September 1985, the first element of your cost base and reduced cost base is the market value of the asset on the day the person died. This is unless they made major improvements to it after that date.

If the deceased had any unapplied net capital losses when they died these do not transfer to you as a beneficiary or legal personal representative. This means you can't use any such losses to offset against any net capital gains.

 

There may be reporting requirements from when your Mum owned them. Check the information online and you can also talk with a tax agent. 

 

Hope this helps.

 

Regards,

Jodie2.    

 

3 REPLIES 3
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Most helpful response

Community Support

Replies 2

Hi @Chrissie,

 

Thank you for reaching out to us. When shares are sold or disposed of this is deemed a Capital Gains tax event. 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.

 

CGT will apply if the asset is transferred under the will to a tax-advantaged entity (such as a charity), or to a foreign resident. You must report this in the person's date of death tax return.

 

If the deceased person acquired the asset before 20 September 1985, the first element of your cost base and reduced cost base is the market value of the asset on the day the person died. This is unless they made major improvements to it after that date.

If the deceased had any unapplied net capital losses when they died these do not transfer to you as a beneficiary or legal personal representative. This means you can't use any such losses to offset against any net capital gains.

 

There may be reporting requirements from when your Mum owned them. Check the information online and you can also talk with a tax agent. 

 

Hope this helps.

 

Regards,

Jodie2.    

 

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Newbie

Replies 1

Many thanks Jodie2, I have already researched the info on the ATO website and different tax agents are giving me different answers. Can you confirm that:

 

Because my father's pre 85 shares transferred to my mother (off market under his will) when he died that this constitutes a CGT event; so that

In my mother's hand's the cost base would be as at my father's date of death; so that

In my hands (after transfer off market under her will) the cost base is as at my father's date of death OR

Because the shares "were aquired" pre 85 the cost base is as at my mother's date of death.

Thank you so much - I am looking for relevant rulings - can you refer me to any?

Chrissie

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Community Support

Replies 0

Hi @Chrissie,

 

Thank you for your reply. You received them from your Mum. So the CGT event she had is listed via the link I provided. If you then received them from her it is a separate CGT event. Not from when your dad passed...

 

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.

 

CGT will apply if the asset is transferred under the will to a tax-advantaged entity (such as a charity), or to a foreign resident. You must report this in the person's date of death tax return.

If the deceased person acquired the asset before 20 September 1985, the first element of your cost base and reduced cost base is the market value of the asset on the day the person died. This is unless they made major improvements to it after that date.

If the deceased had any unapplied net capital losses when they died these do not transfer to you as a beneficiary or legal personal representative. This means you can't use any such losses to offset against any net capital gains.

 

We do have an area you can discuss this with in relation to inheriting assets relative to CGT. You can contact us for further advice if this does not answer it for you.

 

Hope this helps.

 

Regards,

Jodie2.