Shares & Funds Inherited property and CGT

Discussion in 'Accounting & Tax' started by redsquash2, 19th Oct, 2019.

Join Australia's most dynamic and respected property investment community
  1. redsquash2

    redsquash2 Active Member

    Joined:
    1st Jul, 2015
    Posts:
    39
    Location:
    Brisbane
    For shares purchased after 1986
    1
    Inherited shares are taken to be acquired as at date of death. If the deceased held them for over 12 months, they were eligible for discount capital gain. Does this eligibility carry through to me?

    2
    For shares acquired at $10 and sold for $5 the Capital loss carries through to me.

    Is this correct? (ignore expenses )

    3
    For investment property purchased after 1986 the capital gain calculation on a $200,000 sold property originally purchased for $100,000 is

    $100,000 x .5= $50000 .This is added to your income

    Is this correct?
    Thanks
     
  2. Terry_w

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

    Joined:
    18th Jun, 2015
    Posts:
    35,860
    Location:
    Australia wide
    1. The 12 months is based on acquisition date of the deceased.
    2. Cost base is the cost base of the deceased.
    3. what about other cost base expenses?

    generally vague wordings in your post so get specific tax advice.
     
  3. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    7,924
    Location:
    Australia
    Is your first example supposed to be acquired pre sept 1985?

    Put in the specific situation without your own interpretation.

    there are lots of things you havent asked. Like using the deceased estate’s tax threshold.
     
  4. redsquash2

    redsquash2 Active Member

    Joined:
    1st Jul, 2015
    Posts:
    39
    Location:
    Brisbane
    Cost base expenses have not been included as I am
    unclear how that works .which is why I posted.
    I know the calc is wrong . i just dont know wat else is needed.

    assume depreciation of $20000.
    Is that what you mean by cost base?
    Thanks for the quick reply Terry
     
  5. redsquash2

    redsquash2 Active Member

    Joined:
    1st Jul, 2015
    Posts:
    39
    Location:
    Brisbane
    For shares and property purchased after 1986
     
  6. redsquash2

    redsquash2 Active Member

    Joined:
    1st Jul, 2015
    Posts:
    39
    Location:
    Brisbane
    Trainnee, deceased estates tax threshold is irrelevent
     
  7. Terry_w

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

    Joined:
    18th Jun, 2015
    Posts:
    35,860
    Location:
    Australia wide
    Depreciation of building works reduces the costbase - resulting in higher CGT, with plant and equipment there might be a balancing adjustment needed.
     
  8. redsquash2

    redsquash2 Active Member

    Joined:
    1st Jul, 2015
    Posts:
    39
    Location:
    Brisbane
    I think I have got it. Only use building works depreciation.

    In this hypothetical Scenario a cost base of $100,000 is reduced by $ 20,000 of depreciation to

    have a new cost base upon sale of $80,000

    so, $200,000-$80000 = $120000 CGT calculation

    $120,000 x.5=$60,000
    $60,000 is added to the personal income for calculation of income tax .

    "With plant and equipment there might be a balancing adjustment needed."
    Terry Can you give an example pleaseof the of the type of adjustment.I dont really follow
     
  9. Terry_w

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

    Joined:
    18th Jun, 2015
    Posts:
    35,860
    Location:
    Australia wide
    Here is an example from the ATO

    Example: Working out an assessable balancing adjustment amount, ignoring any GST impact

    Bridget purchased a cabinet that she held for two years and used wholly for a taxable purpose. She then sold the cabinet for $1,300. Its adjustable value at the time was $1,200.

    As the termination value of $1,300 is greater than the adjustable value of the cabinet at the time of its sale, the difference of $100 is included in Bridget’s assessable income as an assessable balancing adjustment amount.

    End of example


    Example: Working out a deductible balancing adjustment amount, ignoring any GST impact

    If Bridget sold the cabinet for $1,000, the termination value would be less than the adjustable value of the cabinet at the time of its sale ($1,200). The difference of $200 is a deductible balancing adjustment amount.
     

The shift to the regions has been quite profound with Millennials and Gen X leading the way. It seems affordability, lifestyle, and working from home have been the key drivers from which these generations have been able to take most advantage.