CGT Question

Hi all,

Any insight into the following would be highly appreciated. My father passed away unexpectedly a couple of months ago. He sold x3 of his IP’s in 2018 that he had bought between 2012 and 14, in total across the x3 he made hypothetically $220k (straight deduction from bought price to sold price - not accounting for fees). He didn’t pay CGT in 2019 and didn’t make it until tax time this year to see to this.

The properties were mortgaged in both my mother and fathers name. Does the responsibility now fall onto my mother to pay the CGT in its entirety, or is it halved, or does it stay the same and still owing in this EOFY?

I plan on speaking with an accountant to run over this but any insight into the matter is highly appreciated.

Thanks

 

Not understanding. If the properties were sold in 2018, why werent capital gains declared as income in his 2019 tax return?

 

Spouses are not liable for each other's debts. It would come out of the estate. If the estate doesn't have enough money he could be insolvent in death.

There will be complications if they had joint accounts.

Best to speak to a lawyer prob

 

I’d ask him if I could?

 

The point being cg has to be declared in the correct year. So it may be that the 2019 return needs to be amended.

check with your tax adviser. The 50% discount may apply. Stamp duty, legal costs etc may reduce the gains. Do you have all the purchase and sale documents etc?

the estate would be liable for tax payable.

 

Thanks Terry, appreciate the insight.

 

Thanks a lot, that’s highly helpful.

 

The executor will have to do the tax returns of up to the date of death and while the estate is finalised.The executor needs to make sure this is done properly otherwise they could be personally liable for any tax omitted. It might even be best for family members to decline to act in some cases to reduce the risk.

 

Could you please elaborate on the last line “it might even be best for family members to decline to act in some cases to reduce the risk”?

 

don't act as executor if there is a risk - which could be the case with complex situations involving missed tax returns.

Are there any assets to transmit?

 

There's a company to transmit, which owns a chunk of a franchise business and a couple of other properties. Although not sure if they'll be needed to be transmitted as the company is owned by both mother and father and the properties are from a joint SMSF for both of them.

 

A company cannot pass via a will. Only the shares can. Are the shares jointly owned or do they have 50/50 each? If jointly owned are they tenants in common or joint tenants.

If there is a SMSF I hope the same company that owns the franchise is not acting as trustee.

 

sounds messy. as @Terry_w has suggested a lawyer versed in tax or part of a larger firm that has a tax division will be a good starting point