Capital base of inherited assets

Hello, I have a question based on what a friend was telling me about there circumstances. Around 2002 parent died and they inherited shares and property. Some was purchased before 1987 some after. Some shares also from a farmers coop (wesfarmers)so never actually purchased Any idea how the property and shares are treated?

Cheers

 

Tax advice is required. It will vary with different issues. CGT assets like shares or property NEVER have a $0 costbase. The property will depend when the person died and what they used the property for. The shares in WES will also be affected by a number of capital gains events that have occurred since Coles Myer Shares = WES = New WES / Coles demerger and also with capital returns impacting the costbase. I suspect the deceased had Coles Myer shares at some time.

Its strange that since 2002 this issue wasnt encountered. Inheritance of CGT assets will generally pass on a CGT liability of some form or another. Leaving it until 17 years later just makes it harder to address.

 

Thanks Paul, many people never think about it until they consider selling. At least they are thinking about it before selling not after

 

Their costbase will likely to be the market value at the date of death.

 

Thats only for pre 1985 assets, right?

 

No, my understanding is its for all assets.

Which is a bonus for those in the next generation inheriting a multi million dollar home.

 

My understanding is that is only for ppor inheritances and not say shares acquired after 1985?

 

This person inherited assets from a person who acquired them pre85.
Generally other assets have a cost base the same as the cost base of the deceased person, except the main residence of the deceased which will generally have a cost base of the value at death.

 

Unfortunately not the case.

 

Thanks for your replies.

On a slightly side not could one inherit a heap of shares (or investment property) that have lost a lot of value (since purchase), sell them and claim large capital loss?
Also on this matter does the house one inherits have to be the persons ppor? If the deceased's house has lost a lot of value since they purchased it could you decide its not their ppor?

 

Not necessarily with Coles Myer >>> Wesfarmers. Its a common pre-CGT asset (or some of it). Loads of pepol ownerd them in the olden days (jees I sound old) for the former discounts in store And property isnt necessarily at market value either.

 

yes. But determining the cost base comes into the maths

 

So these shares wouldn't have a cost base?

 

All shares have a costbase. Its a common misunderstanding that taxpayers think there is no cost so there is no costbase. eg DRP, bonus shares, rights issues, new issues, new acquisitions, employee issued shares, gifted shares etc.Inheritance too.

What the parent paid wont be the costbase for the present Wesfarmers for the inheritance but may be part of an element. Wesfarmers costbase has been subject to many events. (Not as many as Westfields )

1. Some may be pre-CGT
2. Some likely post CGT (incl DRPs)
3. Adjustmnets to the costbase for capital returns
4. Adjustment for demerger

Typically in these cases we encourage the beneficiary to make registry history enquiries for the deceased holdings and for their post death holdings too. That is messy for Wesfarmers and things like to old WES and the New WES (after WESO was issued) etc all mean several HINs and changes but may require 4-6 different HIN reports. Based on this and the original cost the costbase can be reconstructed so that tax can be minimised, not maximised and an accurate tax outcome determined

I suspect the real tax saver here will be the pre-CGT bit.

 

probably inherited $100 of wesfarmers shares.

 

not sure how much, maybe $100 when it was 5c per share (was it ever this low?)