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Cost base of shares inherited from an estate

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I have a CGT question regarding the inheritance of shares as a beneficiary to an estate.


It is not completley clear to me what the cost base will be for the beneficiary of inherited shares where the shares were all originally purchased by the deceased after the 20th September, 1985.

 

I interpret it as one of the following, or maybe there is another interpretation.

  1. The cost base for the beneficiary for the purposes of CGT calculations is the market value of the shares as of the date of death. That is, the date on which the beneficiary is deemed to have acquired the shares as part of a deceased estate transfer.
    Or.......
  2. The cost base for the beneficiary for the purposes of CGT calculations is the original cost base as if the deceased person was still alive. That is, the beneficiary gets no real advantage here, they are deemed to have inherited the full buying and selling history of the deceased person and as such has to know the breakdown of the cost base across the share parcel.

Which one is it?

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TaxTime Support

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Hi @badger55

 

Welcome to our community and thanks for your first post.

 

As you will see from the link included 1. is talked to on our website under Deceased estates and capital gains tax in Paragraph 2.

 

I hope that helps you.

 

Kind Regards
MarkA

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Best answer

TaxTime Support

Replies 3

Hi @badger55

 

Welcome to our community and thanks for your first post.

 

As you will see from the link included 1. is talked to on our website under Deceased estates and capital gains tax in Paragraph 2.

 

I hope that helps you.

 

Kind Regards
MarkA

Newbie

Replies 2

It's a great question, but was the answer "1" or "2"?

TaxTime Support

Replies 1

Hi @John99

 

Great to have you join our community so welcome!

 

Generally if a deceased person acquired their asset on or after 20 September 1985, the first element of the client's cost base (money or property given for the asset) and reduced cost base is taken to be the cost base (indexed where relevant) and reduced cost base of the asset on the day the person died. So based on the limited details it would appear Item 2.  See link above under the heading Assets acquired by the deceased on or after 20 September 1985

 

Thanks for your post.

Kind Regards

MarkA

Newbie

Replies 0

It would be hard to figure out the answer from the link provided without a lot of extra knowledge. There are 3 sentences, 2 have "may" in them and costbase as such is not mentioned at all.

 

I would take issue with the idea that there is no benefit though. The beneficiary can keep the shares at no cost and have all those fat dividends and franking credits

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