Estate planning: Taxation of deceased estates

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1 TB 20 Estate planning: Taxation of deceased estates Issued on 15 November Summary Under Australian law there are no duties, however, income and some capital transactions may be taxed as a consequence of a person s. Tax consequences may differ from the perspective of the: deceased person executor, or of the deceased estate. We focus on the responsibilities of the executor when administering a deceased estate and the tax treatment of income and assets when received by the deceased estate or a. Stages of administration of a deceased estate There are a number of stages of administration of a deceased estate. These include: burial of deceased person executor appointed by Will or administrator appointed by Court apply for probate and granted by Court assets vest in executor who administers estate date of and trust tax return lodged initial stage: net income of estate is applied to reduce debts (including tax liabilities), etc intermediate stage: part of the net income of estate that is not required to pay debts, etc., may be paid to beneficiaries final stage: debts, etc., are paid or provided for in full and net income and assets of estate are distributed to beneficiaries. Tax responsibilities of executor An executor of a deceased estate has certain taxation responsibilities both on behalf of the deceased person and the deceased estate. Some of the responsibilities include: notifying the Australian Tax Office (ATO) of the person s, to stop the issue of any notices which may cause distress to partners or other relatives lodging previous tax returns on behalf of the deceased person, if required lodging 'date of ' (final) personal tax return on behalf of the deceased person applying for a trust tax file number for the deceased estate if trust tax returns need to be lodged in the future preparing and lodging trust tax returns for the deceased estate, if necessary making distributions of income and capital of the estate to beneficiaries paying tax on behalf of certain beneficiaries. Any tax liability that may arise as the executor of an estate is independent of the executor s personal tax liability. Authority to deal with the tax affairs of the deceased person An executor of an estate will need proof of their authority if they are to deal with the tax affairs of the deceased. Once a person has been appointed as an executor of the estate they should write to the ATO with details of the deceased person s: full name date of birth date of contact address, for example, tax agent or the executor tax file number, if known. An executor will need to provide proof of their identity and documents such as the certificate and the Will of the deceased or letter of probate (when it is granted this may be some time after the executor lodges the deceased person's tax returns). The tax file number of the deceased person cannot be disclosed by the ATO to the executor until they have established their identity. Once that is done, the executor can request the tax file number of the deceased person over the phone or have it sent to them.

2 Taxation of income received before Tax return for the deceased person The executor is required to lodge all outstanding tax returns up to the date of of the person. There may be a number of reasons why a personal tax return for the deceased person may be required. This may include: tax has been withheld from the income earned by the deceased person prior to their the deceased person earned taxable income exceeding the tax-free threshold tax has been withheld from interest or dividends because no tax file number was quoted by the deceased to the investment body the deceased had lodged tax returns in prior years. Final tax return not required for deceased person If the executor has determined that a final tax return is not required, they, or the deceased s tax adviser should complete a Non-lodgment advice form and send it into the Tax Office. On the form, where it asks for the reason for not lodging a tax return, DECEASED should be printed followed by the deceased person s date of. Date of return required for deceased person If the deceased person has been lodging tax returns prior to their, the executor will need to submit a final tax return on behalf of the deceased. This will be the final personal tax return of the deceased person with their personal tax file number. This tax return is known as the date of return. That tax return should cover the period from the previous 1 July to the date of. For example, if the person s date of was 6 March 2010, the date of tax return will cover the period 1 July 2009 to 6 March The final tax return should include all assessable income derived by the deceased person and all the tax-deductible expenses incurred up to the date of. (Income derived after the date of, and any deductible expenses incurred after the date of, are included in the deceased estate's trust return). Examples of assessable income include: salary or wages bank interest dividend from share investments trust distribution from managed investment funds rent from investment properties capital gain from the sale of assets. Examples of tax-deductible expenses include: work-related expenses like tools of trade, uniform or professional publication tax related expenses incurred by the executor in relation to the income tax affairs of the deceased person on-going management fees paid to investment advisers bank charges rental expenses in relation to an investment property. Gifts made under a Will are not tax deductible unless the gift is made under the Cultural Bequest Program. In such instances, the deduction is allowable in the date of tax return of the deceased person. A claim for medical expenses tax offset may be made in relation to net medical expenses incurred by the deceased person. This includes the amounts incurred by the deceased person but paid by the executor of the deceased estate. Funeral expenses are not tax deductible nor are they eligible for the medical expense tax offset. Tax rates for final tax return of deceased person The general personal tax rates, with the full taxfree threshold, will apply to the final tax return of the deceased person, if an Australian resident. The Medicare levy and Medicare levy surcharge may also be payable. Higher Education Loan Program (HELP) debts and Student Financial Supplement Scheme (SFSS) If the deceased person had an accumulated HELP and/or SFSS debt at the time of their, a compulsory HECS/SFSS repayment will be calculated. Compulsory repayments will be raised in the income tax notice of assessment when the minimum repayment thresholds are reached. 2

3 Any compulsory HECS and/or SFSS repayment included on an income tax notice of assessment which relates to the period before must be paid by the deceased estate. The remainder of the accumulated HECS and/or SFSS debt is cancelled. On 1 June 2006, all outstanding Higher Education Contribution Scheme (HECS) debts became accumulated HELP debts. The SFSS was a loan scheme to help tertiary students cover their study expenses and closed on 31 December employment termination payments superannuation benefits dividend from share investments trust distribution from managed investment funds investment income from a friendly society funeral policy taken out after 31 December 2002 rent from investment properties capital gain from the sale of assets. Tax clearance The notice of assessment, received after the date of return is lodged, is formal notification that all income tax liabilities to the date of have been satisfied where: all the liabilities on the notice have been satisfied, or the notice states that no tax is payable. Where the deceased person has not lodged a return for several years, the last notice of assessment will serve the same purpose. Taxation during administration of estate Taxation of the deceased estate After the date of, the deceased estate may receive income from various sources (see Assessable income below). A trust tax return will need to be lodged for the deceased estate if there is tax payable on the income or capital gains or if tax has been withheld from that income. A trust tax return will need to be lodged each income year until the deceased estate is fully administered (that is, all of its assets and income are distributed to the beneficiaries) and no longer deriving income. The net income of the deceased estate is taxed either in the hands of: the beneficiaries who are presently entitled, or the executor. Assessable income Any income derived after the date of belongs to the deceased estate. Income derived after may include: salary and wages unpaid at the date of bank interest Amounts for annual and long service leave paid to the deceased person s beneficiaries or the executor are not taxed. Superannuation benefits A superannuation benefit may be paid to the deceased estate. This amount is tax free when passed onto the deceased person s dependants. In this context dependent means the spouse or children under 18 of the deceased, or a person who was financially dependant on the deceased, or in an interdependency relationship with the deceased. Any part of the benefit that is assessable to the deceased estate is included in the trust s tax return under Other income. The assessable part of the benefit is deemed to be income to which no is presently entitled and is subject to benefit tax rates. Medicare levy is not payable. Refer to Technical bulletin 37 - Superannuation benefits for more information. Tip: If the ultimate beneficiaries are nondependants (adult children), directing a superannuation benefit to the estate will avoid the payment of Medicare levy. However the issues associated with the benefit forming part of the estate should also be considered eg potential challenges to Will, payment may not be timely. Employment termination payments The estate may receive a benefit termination payment from the deceased s employer. The payment is taxed depending on whether the ultimate is a dependant or non-dependant of the deceased and the amount of the taxable component of the payment. The tax which applies to the taxable component is as follows: 3

4 Death benefit termination payment paid to estate Beneficiary is dependant^ Beneficiary is non-dependant Taxable component up to $160,000 Taxable component over $160,000 0% Top marginal tax rate 30% Top marginal tax rate ^ Dependant means the spouse or children under 18 of the deceased, or a person who was financially dependant on the deceased, or in an interdependency relationship with the deceased. The proportion of the payment that will benefit 1 or more dependants of the deceased is subject to tax as if the trustee of the deceased estate was a (single) dependant who received the payment. The proportion of the payment that will benefit 1 or more non-dependants of the deceased is subject to tax as if the trustee of the deceased estate was a (single) non-dependant who received the payment. Example Extent to which dependants or non-dependants will benefit from payment Dependant/s 50% Non-dependant/s 50% 1 Dependant 25% 3 Non-dependants 75% Amount of benefit termination payment Tax payable by trustee of deceased estate $150,000 $75,000 Nil $75,000 30% $400,000 $100,000 Nil $300,000: First $160,000 taxed at 30% Balance $140,000 taxed at top marginal rate The employer will not withhold tax from a benefit termination payment paid to a deceased estate. However will issue a PAYG payment summary employment termination payment for the taxable component. Where the taxable component is subject to tax, the amount is included in the trust tax return. Tax related expenses Expenses incurred by the deceased estate in earning assessable income may be tax deductible. For example: tax agent s fees ongoing management fees paid to investment advisers bank charges rental expenses for an investment property. Any gifts made according to the terms of the Will are not tax deductible unless the gift is made under the Cultural Bequest Program. If deductible, the deduction for the gift must be included in the date of return of the deceased and not in the trust return. Losses If the deceased person has accumulated losses at the date of, those losses cannot be carried forward into the deceased estate. Ordinary losses as well as capital losses will lapse at the time of. Tax file number for the deceased estate A tax file number is required to lodge a deceased estate s tax return. The executor will need to complete an ATO form, Tax file number application for a deceased estate, for a trust tax file number and provide certain proof of identity documents. This trust tax file number may be quoted to investment bodies for investments of the deceased estate. Paying tax on the income of the deceased estate There are many factors that determine who pays the tax on the income derived by the deceased estate and the applicable tax rate. They include whether the: beneficiaries are presently entitled beneficiaries are under a legal disability the deceased estate is fully administered. Death benefit termination payments received in consequence of the same employment termination count towards the cap, whether in the same income year or not. 4

5 A summary of the different tax situations follows: If the income is an amount to which A is presently entitled No is presently entitled Then Determine whether or not the is under a legal disability If the is under a legal disability If the is not under a legal disability The income is assessed To the executor on behalf of the To the in their personal income tax return The executor is assessed on the income The tax rates which apply Personal income tax rates apply Personal income tax rates apply Concessional tax rates apply for the first 3 tax returns of the deceased estate While the deceased estate is being administered by the executor they will need to determine whether the beneficiaries are presently entitled and under any legal disability at the end of each financial year (30 June). This will determine who is liable to pay tax on the income of the deceased estate. An executor cannot distribute the income or assets of a deceased estate until the debts of the deceased person, including tax liabilities, are determined and probate has been granted, if required. An executor can distribute some of the income or assets to beneficiaries if they are certain the remainder of the deceased estate is sufficient to cover any outstanding liabilities, for example, tax and other expenses. Meaning of present entitlement Beneficiaries are presently entitled to the income of a deceased estate if they have a claim or interest in the income of the estate and no one else has a legal claim to it. The must also be able to demand immediate payment of the income. This means that beneficiaries can be presently entitled even though they may not have actually received any income from the estate. Generally, beneficiaries are not presently entitled to the income of a deceased estate during the estate s administration. This is because the debtors of the deceased person and anyone challenging the Will may have a legal right to the 's share of the income of the estate. This means that during this period, the income belongs to the deceased estate and not the beneficiaries. However, as administration progresses, it may become clear to the executor that part of the net income of the deceased estate will not be required to either pay or provide for debts. In these circumstances the executor may exercise their discretion and pay some of the income to the beneficiaries. The beneficiaries in this situation will be presently entitled to the income actually paid to them or actually paid to someone else on their behalf. Beneficiaries can be presently entitled if under the terms of the Will, money (income of the deceased estate) is applied for their benefit and not paid directly to them. An example is the payment of expenses of the being paid to a third party. A can only be presently entitled to income accrued after the date of. Meaning of legal disability People are considered to be under a legal disability if they cannot give a valid discharge for money paid to them. Beneficiaries are under a legal disability if they are either: minors (that is, under 18 years of age as at 30 June); bankrupt; or declared legally incapable because of managing their own affairs. When these people become presently entitled to income of the deceased estate, the executor will be assessed on their behalf. The tax rate payable is the personal rate of tax. When is present entitlement determined? The net income of the deceased estate and whether any is presently entitled are determined on the last day of each income year (30 June). This means that, on the last day of the income year, a who is presently entitled will be assessed on their share of the net income for the whole of the income year. 5

6 However, in the income year in which the deceased estate is fully administered, the ATO will accept an apportionment of the net income received. Where the executors and beneficiaries are able to demonstrate, through proper accounts at the completion of administration, the actual amounts of income derived in the periods before and after the day on which the estate was fully administered, an apportionment may be made as follows: Income derived in the period between The beginning of the income year and the day administration was complete The day administration was complete and the end of the financial year Is assessed In the hands of the executor. To the beneficiaries who are presently entitled. Where beneficiaries are under a legal disability, the executor will be assessed on their behalf. For an apportionment to take place: there must be evidence of the income derived during these periods; and the executor, or the beneficiaries, must request it. One exception is when the executor pays part of the income of the deceased estate to a before the estate is fully administered. In such an instance, the would be assessed as they are presently entitled to that income. Lodging the deceased estate s trust tax return After an executor has determined whether the beneficiaries are presently entitled and whether they are under any legal disability at the end of the financial year, they are then required to lodge a trust tax return for the deceased estate if it is liable to pay tax. If the deceased estate is paying tax on franked dividends, the imputation credits need to be claimed back through the trust tax return. Tax rates for the deceased estate Tax rates no presently entitled To the extent beneficiaries are not presently entitled to the net income of the deceased estate, the tax liability will rest with the deceased estate. First three income years For the first three tax returns, the deceased estate income to which no is presently entitled is taxed at personal rates, with the benefit of the full tax-free threshold. No Medicare levy is payable. Example The deceased passed away on 1 August The first tax year for the deceased estate will cover the period 2 August 2010 to 30 June The second tax year will be from 1 July 2011 to 30 June The third tax year will be from 1 July 2012 to 30 June If the deceased estate earned taxable income of $6,000 or less during those first three tax returns, there is no tax payable. Date of 1 August st tax 2nd tax year Concessional tax rates apply to the estate Tip: It may be worthwhile to consider maintaining the trust estate for the 3 year concessionally taxed period as: the estate may have a lower rate of tax compared to the beneficiaries it may be beneficial to realise capital gains during this period. 3rd tax year Taxed as trust This concessional period of three tax years at personal tax rates, with the benefit of the full taxfree threshold cannot be extended beyond the end of the 3rd tax year. If the administration of the deceased estate is completed in the same income year as the date of, the executor does not need to lodge a trust tax return for the deceased estate if: no is presently entitled to any of the income of the deceased estate (they may receive assets only), and the taxable income of the estate is below the tax-free threshold of $6,000. 6

7 Fourth income year and later For deceased estates with prolonged administration that extend beyond the concessionally taxed period, there are special progressive trust tax rates that apply. For the 2010/11 financial year, the special progressive tax rates are: Deceased estate taxable income (no present entitlement) $0 - $416 Nil Tax rates $417 - $594 50% of the excess over $416 $595 - $37,000 $89 plus 15% of the excess over $594* $37,001 - $80,000 $5,550 plus 30% of the excess over $37,000 $80,001 - $180,000 $18,450 plus 37% of the excess over $80,000 $180,001 and over $55,450 plus 45% of the excess over $180,000 * If taxable income exceeds $594, the entire amount is taxed at 15% No Medicare levy is payable. Tax rates presently entitled and not under a legal disability If the is presently entitled and not under a legal disability, hey are liable for tax in their own tax returns. For example, if an executor makes an income distribution to an adult resident, it is the responsibility of that person to declare the amount in their personal tax return and pay income tax on it at their personal tax rate. Tax rates - presently entitled but under a legal disability If the is presently entitled, but under a legal disability, the executor is liable to pay tax on their behalf. The executor is assessed separately for each in this category at personal income tax rates. Normally, unearned income of minors is subject to tax at higher rates and lower tax-free threshold. However, for distributions from a deceased estate, personal tax rates apply. Medicare levy Medicare levy and Medicare levy surcharge are also payable in the same way as if the income was assessed to the. Tax offsets An executor is also entitled to tax offsets to which the would be entitled. For example, dependent spouse, medical expenses and 30% private health insurance tax offsets. The low income tax offset is automatically calculated if the income is below the relevant threshold. The executor will need to include a statement with the tax return that shows the type and amounts of tax offsets claimed. Tax rates non-resident If the is a non-resident for tax purposes, the executor is liable to pay tax on the s share of the trust income distributed at non-resident tax rates. No Medicare levy is payable. Interest and dividends are not included in the nonresident 's trust income. Instead, these are taxed by having a non-resident withholding tax withheld and paid to the ATO. The withholding tax rate varies for different countries and between interest and dividends. Fully franked dividends are not subject to withholding tax. Beneficiaries who are required to lodge income tax returns Beneficiaries who are presently entitled may need to lodge personal tax returns and disclose their distributions from the estate. Accordingly, they need to know certain information about their entitlement. The executor of the estate should provide all beneficiaries who are presently entitled with the following information: their share of trust income that they were presently entitled to the amount of their entitlement that was applied for their benefit the amount that is assessable to them their share of imputation credits associated with any dividends that may be in the trust distribution. Beneficiaries presently entitled but under a legal disability also need to know: the amount of tax the executor has paid on their behalf. A is entitled to receive a tax credit for this tax to avoid taxing the same amount twice. 7

8 Non-resident beneficiaries will also need to know: the amount of interest in their distribution and the withholding tax paid the amount of unfranked dividends in their distribution and the withholding tax paid the amount of franked dividends in their distribution the amount of tax the executor has paid on their behalf. Tax obligations of beneficiaries There may be some tax obligations for beneficiaries depending on the nature of any distribution they may receive. The executor should provide details of trust distributions to the beneficiaries. Corpus (capital) distribution No tax is payable by the estate or on the distribution of corpus. This is the capital amount or income that has already been subject to tax to the deceased estate. For example, the capital in a bank account. If the distribution is a transfer of an asset, there may be capital gains tax consequences for the. Presently entitled and under legal disability The executor is required to pay tax on behalf of beneficiaries who are presently entitled to the income of the deceased estate but under a legal disability (eg. under 18 years old). If the income from the deceased estate is the s only source of income for the year, they do not need to lodge a tax return. Beneficiaries with other income need to lodge a tax return that includes the income distribution from the deceased estate. However, they will be entitled to a credit for the tax payable by the executor on their behalf. Overseas deceased estate The rules for resident beneficiaries are the same regardless of whether the deceased estate is in Australia or overseas. A may be entitled to a foreign tax credit if the income distributed from an overseas deceased estate has been subject to foreign tax. Franked dividends Resident beneficiaries are entitled to franking credits attached to any income distributions from a deceased estate. Income distribution How distributions of income of the deceased estate are taxed depend on whether the beneficiaries are presently entitled to the income. Income used to make payments on behalf of a (eg. to pay for the s expenses) is income to which that is presently entitled. Presently entitled and under no legal disability Resident beneficiaries are personally liable to pay tax on distributions of income, if they are presently entitled and not under any legal disability. This means the income distribution will need to be included in their personal tax return and they will pay tax at their personal tax rates. The income is assessable in the year they became presently entitled to the income, not in the year the amount is received. For example, if a was presently entitled to the income of the estate on 1 June 2010, they are personally assessable on that amount in the year ended 30 June 2010 even though the amount may be received after that date in the following tax year. Capital gains tax When a person dies, the assets that make up their estate can: pass directly to a, or pass directly to the executor who may dispose of the assets or pass them to the. For CGT purposes the distinction between when an asset passes and when an asset is disposed of by the executor to a is important. An asset passes to a if the asset is: specifically bequeathed or devised to the in the Will; or if there is no specific bequest or devise but the executor distributes an asset in specie to a in or towards satisfaction of that s entitlement in the Will (eg. share of residual estate) the distribution is considered to pass to a ; or transferred under family provision legislation or intestacy laws. 8

9 Capital gain or loss on is disregarded There is a special rule which allows any capital gain or capital loss made on a post 19 September 1985 (post CGT) asset to be disregarded if, when a person dies, an asset they owned passes: directly to the executor or to a, or from the executor to a. Exceptions to this rule A capital gain or capital loss is not disregarded if a post-cgt asset owned at the time of passes from the deceased to a: tax-advantaged entity eg charity or superannuation fund; or to a non-resident. In these cases, a CGT event is taken to have happened in relation to the asset just before the person died. These capital gains and losses should be taken into account in the deceased person s date of return. However, any capital gain or capital loss from a testamentary gift of property can be disregarded if: the gift is made under the Cultural Bequests Program (which applies to certain gifts of property not land or buildings to a library, museum or art gallery), or the gift is made to a deductible gift recipient or a registered political party and the gift would have been income tax deductible if it had not been a testamentary gift. CGT payable when a disposes of asset A receiving an asset inherits the cost base of the deceased for a Post CGT asset (plus any subsequent expenses). If a Pre CGT asset, the cost base becomes the market value of the asset at the date of. A capital gain may accrue or a capital loss may be incurred by the on any later disposal of the asset by the. Beneficiary receives asset versus asset sold in the estate may need to be taken into account when making an equal distribution to beneficiaries. CGT payable when an executor disposes of asset Generally CGT is payable on post -CGT assets which are disposed of by the executor. Disposal includes: selling an asset to a third party (not a named in the Will or entitled under the laws of intestacy) selling an asset to a named in the Will under a power of sale. Example. Deceased provided a right to purchase a property which forms part of the estate. Even though the property may be transferred to a under the terms of the Will, ownership passes to the as a purchaser not as a. Therefore it is a disposal of the asset by the executor to the. Exercise of option and purchase of asset is treated as a single transaction i.e. exercise of the option is not considered to be a disposal of option for CGT purposes. Where the executor disposes of an asset, the capital gain must be included in the estate (trust) tax return. Pre CGT assets are deemed to be acquired by the executor at market value at the date of. The disposal of pre-cgt assets by the executor will generally not trigger CGT unless the market value of the asset increases from the date of to the date of disposal. Please see the Appendix for a summary of the above CGT consequences. Small business CGT concessions An individual s LPR or beneficiaries can utilise the small business CGT concessions even when the LPR does not continue to run the business themselves. If the deceased would have qualified for the concessions, the LPR can apply them to the degree the deceased could have provided the asset was disposed of within 2 years of the deceased s. The tax commissioner has discretion to extend the 2 year period. An issue to consider is whether a should receive the assets (in specie) or whether the assets should be sold in the estate and cash given to the. If taken in specie no CGT is payable by the estate but is payable by when they later sell the asset. This could cause problems for the. Any CGT liability relating to an asset 9

10 Stamp duties Each state and territory provides a stamp duty exemption or concession (ie levy a nominal duty of $10 or $20) where the deceased s dutiable property is transferred to the executor or by the executor to a trustee or under a Will or intestacy law. Where assets are transferred to a under a power of sale contained in the Will, a stamp duty exemption or concession may or may not apply depending on each jurisdiction. Each state or territory s provisions should be considered closely as they are expressed and administered differently. Following is a general guideline to how the provisions vary between jurisdictions. State or territory Stamp duty provisions Legislative references NSW, VIC, ACT, TAS QLD WA SA NT Exemption applies to a transfer of dutiable property by the executor made under or in conformity with, the trusts contained in the Will of the deceased person if the transfer is not made for valuable consideration. Exemption applies where the transfer gives effect to a distribution in the estate of the deceased person. Transfer made to a from a person in a fiduciary capacity shall be charged with nominal duty. Exemption applies where the transfer is in pursuance of the Will of a deceased person. Conveyance made by trustee to a where the trustee acquired the dutiable property by virtue of the operation of a testamentary instrument. s63 Duties Act 1997 (NSW) s42 Duties Act 2000 (Vic) Section 69 Duties Act 1999 (ACT) s47 Duties Act 2001 (Tas) s124 Duties Act 2001 (QLD) s73aa(1)(b) Stamp Act 1921 (WA) s71(5)(h) Stamp Duties Act 1923 s9a(c) Sch 2 Stamp Duty Act 1978 (NT) 10

11 Appendix The following table summarises the CGT consequences where a person died on or after 20 September 1985 and an asset of the deceased's estate is transferred to a of the estate. WHERE ASSET TRANSFERRED BY EXECUTOR TO BENEFICIARY Date acquired by executor Deemed acquisition by executor Whether disposal by executor Whether CGT applies to transfer by LPR to Date acquired by Whether CGT applies to subsequent disposal by Asset specifically given to by Will or court order Date of If asset was acquired by deceased before 20/9/85, market value. Otherwise, cost base, indexed cost base or reduced cost base (as case may require) to deceased at date of. NO NO Date of YES Asset sold to under a power of sale Date of If asset was acquired by deceased before 20/9/85, market value. Otherwise, cost base, indexed cost base or reduced cost base (as case may require) to deceased at date of. YES YES Date of sale contract YES Asset appropriated in or toward satisfaction of the 's entitlement Date of If asset was acquired by deceased before 20/9/85, market value. Otherwise, cost base, indexed cost base or reduced cost base (as case may require) to deceased at date of. NO NO Date of YES Asset bought by grantee of testamentary option who exercised the option Date of If asset was acquired by deceased before 20/9/85, market value. Otherwise, cost base, indexed cost base or reduced cost base (as case may require) to deceased at date of. YES YES Date of sale contract YES This Technical Bulletin has been produced by OnePath Technical Services and is intended for the use of financial advisers only. It is current as at the date of publication but may be subject to change. This publication has been prepared without taking into account a potential investor's objectives, financial situation or needs. Before making a recommendation based on this publication, consider its appropriateness based on the client s objectives, financial situation and needs. OnePath Technical Services is not a registered tax agent under the Tax Agent Services Act Your client should refer to a registered tax agent before relying on information in this publication that may impact their tax obligations, liabilities or entitlements. 11

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