Industry News

MEDIA RELEASE – STEP Australia welcomes greater certainty offered by new ‘safe harbour’ Capital Gains Tax guidelines for Deceased Estates

Chair of STEP Australia Mark Fatharly TEP has given a warm welcome to a new guideline on capital gains tax for deceased estates announced last month by the Australian Taxation Office (ATO).

The Practical Compliance Guideline (PCG 2019/15), issued on 27 June 2019, provides 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 tax upon sale, where it cannot be sold and settled within two years of the deceased’s death.

Until now, executors or beneficiaries could disregard any capital gain or loss arising from the sale of the deceased’s main residence if the sale was settled within two years of the deceased’s death. This period could be extended at the Commissioner’s discretion, which resulted in a number of applications for extensions, as many deceased estates exceed this two-year period.

The PCG further enables the executor or beneficiary to self-assess whether the capital gains tax exemption can be extended by a ‘safe harbour’ provision by up to 18-months, providing greater certainty in an area that has caused confusion and concern.

To qualify for the ‘safe harbour provisions’, a number of conditions apply. These conditions include the stipulations that the property was either the deceased’s main residence and not used to produce assessable income, or the dwelling was acquired by the deceased 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 . The PCG also includes examples to illustrate how the safe harbour applies in various situations.

Mark noted, ‘We welcome this initiative from the ATO. 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. STEP Australia was pleased to have provided a submission to the ATO through its Policy Sub-committee on the draft Guideline advocating for change.’

He continued: ‘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.’

CONTACT INFORMATION:

For further information please contact the Chair of STEP Australia Mark Fatharly on Mark.Fatharly@murfett.com.au

ABOUT STEP:

STEP is the global professional association for practitioners who specialise in family inheritance and succession planning. STEP works to improve public understanding of the issues families face in this area and promotes education and high professional standards among its members. STEP members help families plan for their futures, from drafting wills to issues surrounding international families, protection of the vulnerable, family businesses and philanthropic giving. Full STEP members, known as TEPs, are internationally recognised as experts in their field, with proven qualifications and experience.

Find out more at www.step.org