Deceased estate - tax resident?

Discussion in 'Accounting & Tax' started by Trainee, 30th Mar, 2019.

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  1. Trainee

    Trainee Well-Known Member

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    A tax non resident with australian shares dies. The deceased estate pays different tax rates to a resident deceased estate.

    If shares are distributed to a non resident beneficiary it looks like additional cgt payable by the estate.

    Two questions.
    1) if a testamentary trust is used to hold the deceased shares, can the shares be later sold and distributed to resident trust beneficiaries? Then the money be given to the nonresident beneficiary of the estate?

    2) If a tax resident dies, leaving australian shares and cash. Two beneficiaries one resident, one not. Can the shares be given to the resident beneficiary (no cg event) and cash to the nonresident? Does the will need to specifically allow this mix or does the generic assets to be divided between my two daughters a and b imply this already?
     
    Last edited: 30th Mar, 2019
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    1. if the trustee is a resident, yes
    2. depends on the will. If a will doesn't allow it a deed of family arrangement might be a possibility.

    they way i draft wills is that the executor has the powers to give different assets to different beneficiaries to even things up with taxes.
     
  3. Trainee

    Trainee Well-Known Member

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    Can the trustee be an australian company with resident directors and shareholders?
     
  4. Trainee

    Trainee Well-Known Member

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    Also it states cg event occurs to the deceased if distributing shares to a non resident beneficiary, the estate will be taxed at its rates?

    Ie resident decreased estate at same rate as resident individuals, non resident deceased estate taxed at non resident individual rate.
     
  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Yes
     
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    What is 'it'?

    Leaving shares to a non-resident beneficiary will trigger CGT event for the deceased
     
  7. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    CGT event K3

    This is another reason for incorporating a testamentary discretionary trust in your will as when you die your children could be living and working overseas and be a non-resident.
     
  8. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Australian shares are not subject to CGT if a non-resident trustee OR beneficiary is the legal owner. It is excluded from tax reporting unless the trustee / beneficiary owns greater than 10% of the company.
     
  9. Trainee

    Trainee Well-Known Member

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    Can i get a ato or legislation reference to this?
     
  10. Trainee

    Trainee Well-Known Member

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    Does this apply to the deceased estate of a non resident as well?
     
  11. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Taxable Australian property

    CGT in Australia only applies to Taxable Australian Property (TAP) including direct property or indirect property interests. Listed shares are excluded bar the 10% rule or the related indirect 50% property rule
     
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