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Capital gain or capital loss on death is disregarded

Pursuant to Income Tax Assessment Act 1997 Sec 128.10, any capital gain or capital loss made on a post-CGT asset is to be disregarded. It will be disregarded if, when a person dies, an asset they owned passes:

  • to their legal personal representative or to a beneficiary, or

  • from their legal personal representative to a beneficiary.

The LPR, beneficiary, or surviving joint tenant is taken to have acquired the assets on the date of death. Generally, the cost base of the assets is transferred to the assets in the hands of the LPR, beneficiary, or joint tenant. However, market value is used if the deceased acquired the assets before 20 September 1985.

The LPR or beneficiary of the deceased estate will be eligible for the small business CGT concessions where:

  • the asset is disposed of within two years of the date of death (although we may allow a longer period by granting an extension of time), and

  • the asset would have qualified for the small business CGT concessions if the deceased had disposed of the asset immediately before their death.

Provided these conditions are satisfied, the small business CGT concessions are also available to the trustee of a trust established by the will of the deceased, a beneficiary of such a trust, and a surviving joint tenant.

Small business owners who sell business assets may be eligible for tax concessions on capital gains and may be able to contribute an amount into superannuation to help fund their retirement. If the business asset being sold had been owned for at least 15 years, the entire capital gain may be exempt from tax under the 15-year exemption. The entire sale proceeds may be contributed into superannuation using the CGT cap (up to the lifetime limit).

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