The One Thing You Should Avoid.

The one thing you should avoid before spending all the proceeds from a deceased estate.

The time after a loved one passes away can be challenging and emotional. At Roy A. McDonald, we want to help you avoid further stress and worry by having a large tax bill because you didn’t speak to us about the proceeds or tax implications of your estate.

If you are in receipt of an asset (money or property) this may raise Capital Gains Tax (CGT) issues. One of the actions we suggest you should take, if you are in receipt of this benefit, is to make an appointment here to see how having received this asset affects you. It could help you avoid having an ATO demand for payment.

To assess if you have to pay Capital Gains Tax, we first need to establish whether the asset of the deceased was purchased pre or post 19th September 1985. If an asset (property/shares etc) was to pass from a loved one to you it is important to see if CGT was applied or not and when the property was purchased.

If your loved one lived in the property and so do you, there will be no CGT. If however, the asset becomes an investment, we first need to establish if CGT has already been applied before:

Pre CGT Asset.

If the property increased in value and you derived income from it, the Capital Gains will be applied from the day the item was gifted to you until you sold it.

Post CGT Asset.

If the property increased in value and you derived income from it, the way Capital Gains is determined is dependent on when the property was purchased and if CGT has already been paid. Let’s assume it hasn’t, and say the property was worth $10,000 back in 1985 and when you sold it, it is worth $1,000,000. The Capital Gain is effectively worth $990,000. This is why it is very important to make an appointment here with us.

Super Funds and non-Residents.

If you give a charity, super fund or another type of tax advantaged entity an asset or you are a non-resident, this might trigger a CGT event.

Make an Appointment

If any of this information would be beneficial, why not make an appointment by clicking the “Make an Appointment” icon to the left.