Capital Gains Tax (CGT) 2011

Death and taxes: the threat of CGT event K3

Source: Taxation In Australia Journal Article

Published Date: 1 Aug 2011


The manner in which the CGT legislation applies in the event of death is not as certain as it may appear, particularly in the case of non-resident beneficiaries to a deceased estate. In this article, the authors outline the consequences under Australian legislation for a non-resident beneficiary of the estate of an Australian resident taxpayer and, indeed, any resident beneficiaries of that same estate.

The article shows that there may be an unfortunate consequence, namely, the taxation of an unrealised capital gain on death, where thought is not given to planning and drafting in the case of an estate which has a non-resident beneficiary. Drafting and non-drafting techniques are discussed which may alleviate that threat. The article also considers the impact of the announcements in the 2011 federal Budget in relation to the application of taxation law to deceased estates and, in particular, in relation to CGT event K3.

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Capital Gains Tax (CGT) 2011

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