S128-15 Income TAX Assessment ACT 1997 - SECT 128.15 Effect on the legal personal representative or beneficiary PDF

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AustLII Commonwealth Consolidated Acts INCOME TAX ASSESSMENT ACT 997 - SECT 28.5 Effect on the legal personal representative or beneficiary

INCOME TAX ASSESSMENT ACT 997 - SECT 28.5 Effect on the legal personal representative or beneficiary () This section sets out what happens if a * CGT asset you owned just before dying: (a) devolves to your * legal personal representative; or (b) * passes to a beneficiary in your estate. Note :

Section 28- 25 has different rules if the asset passes to a beneficiary in your estate who is the

trustee of a complying superannuation entity. Note 2:

If the beneficiary is an exempt entity, Division 57 in Schedule 2D to the Income Tax Assessment

Act 1936 has rules about exempt entities that become taxable. It sets out what the entity is taken to have purchased its assets for when it becomes taxable. Note 3:

If the beneficiary is a foreign resident, Subdivision 855-B sets out what happens if the beneficiary

becomes an Australian resident. The beneficiary is taken to have acquired each asset owned just before becoming an Australian resident for the market value of the asset at that time. (2) The * legal personal representative, or beneficiary, is taken to have * acquired the asset on the day you died. Special rule for legal personal representative (3) Any * capital gain or * capital loss the * legal personal representative makes if the asset * passes to a beneficiary in your estate is disregarded. Cost base rules for both (4) This table sets out the modifications to the * cost base and * reduced cost base of the * CGT asset in the hands of the * legal personal representative or beneficiary.

Modifications to cost base and reduced cost base The first element of the For this kind of CGT

The first element of the asset's reduced cost

Item

asset:

asset's cost base is:

1

One you * acquired on or the * cost base of the after 20 September asset on the day you

the * reduced cost base of the asset on the day

1985, except one

died

you died

One that was * trading

the amount worked out

the amount worked out

stock in your hands just

under section 70- 105

under section 70- 105

base is:

covered by item 2, 3, 3A or 3B 2

before you died 3

A * dwelling that was your main residence just

the * market value of the * dwelling on the day

the market value of the * dwelling on the day you

before you died if:

you died

died

If you were a foreign

the * market value of the

the market value of the

resident just before you

asset on the day you

asset on the day you

died--an asset that was not * taxable Australian

died

died

One that * passes to a

the * market value of the

the market value of the

trustee of a * special

asset on the day you

asset on the day you

disability trust

died

died

One you * acquired

the * market value of the

the market value of the

before 20 September

asset on the day you

asset on the day you

1985

died

died

(a) the dwelling was not then being used for the * purpose of producing assessable income; and (b) you were not then an * excluded foreign resident 3A

property just before you died, except one covered by item 2 3B

4

Note :

Section 70- 05 has a general rule that the person on whom the trading stock devolves is taken to

have bought it for its market value. There are some exceptions though. Note 2:

Subdivision 8-B contains other rules about dwellings acquired through deceased estates.

Note 3:

The rule in item 3 in the table does not apply to a dwelling that devolved to your legal personal

representative, or passed to a beneficiary in your estate, on or before 7.30 pm on 20 August 996: see section 28- 5 of the Income Tax (Transitional Provisions) Act 1997 . Further rule for a beneficiary (5) A beneficiary can include in the * cost base or * reduced cost base of the asset any expenditure that the * legal personal representative would have been able to include at the time the asset * passes to the beneficiary. The beneficiary can include the expenditure on the day the representative incurred it. Example:

You die on  May 995 owning land. On 5 June 995 your legal personal representative pays

$500 council rates for the land. On 3 July 995 your representative transfers it to a beneficiary in your estate, who is taken to have acquired it on  May 995.

The beneficiary can include the $500 in the third element of the cost base of the land. It is included on 5 June 995. Collectables and personal use assets (6) The * legal personal representative or beneficiary is taken to have * acquired a * collectable or a * personal use asset if: (a) you acquired it on or after 20 September 985; and (b) it was a * collectable or a * personal use asset (as appropriate) in your hands when you died. Note :

Capital losses from collectables can be used only to reduce capital gains from collectables: see

section 08-0. Note 2:

Capital losses from personal use assets are disregarded: see section 08-20....