ATO change eases the sale of deceased estates

STEP Australia has welcomed new guidelines on capital gains tax announced by the Australian Taxation Office (ATO) as a way to ‘simplify and clarify’ the process of deceased estates.

Issued in June, the Practical Compliance Guideline (PCG 2019/15) would provide an executor or beneficiary of a deceased estate with clarity on when the ATO will extend the two-year period that exempts a deceased residence from capital gains upon sale.

Until now, executors or beneficiaries could disregard any capital gain or loss if the sale was settled within two years of death.

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Now the PCG would enable the executor or beneficiary to self-assess whether the capital gains tax exemption can be extended by a ‘safe harbour’ provision of up to 18 months.

To qualify, the property must have been the deceased’s main residence or acquired before 20 September 1985 and subject to defined circumstances that it was not possible to sell and settle the property within two years of the death.

STEP Australia chair, Mark Fatharly, said: “This is an area of tax law that can still be rather subjective and any move to simplify or clarify things is to be commended. It will provide welcome guidance to many executors and professional advisors on a very difficult issue.

“Given the significant intergenerational wealth transfer that is occurring and our aging society, we welcome all such initiatives to simplify and clarify processes relating to deceased estates, providing bereaved families with reassurance and certainty at a difficult time.”

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