Any savvy tax accountant mumma's out there that may be able to provide answers that the ATO only seem to confuse me about?
My Grandfather passed away 10 years ago leaving his estate to my family. The estate is managed by his lawyer executor. There is a house in the estate that my family didn't want to sell 10 years ago but wants to sell now. The lawyer is going to have the house sold and take the Capital Gains Tax out of the sale price before distributing the rest of the funds individually to the family members.
What is not clear to me is, do I need to declare my share in my income tax? Technically I have already paid CGT, therefore if I do have to declare it in my income tax then wouldn't I be paying two lots of taxes?
Thank you for your time.
1 Replies
Hi, the estate is most likely run in a trust structure and you as a beneficiary receive a share of the income. A trust does not generally pay income tax as it distributes all of its income to the beneficiaries who declare this income in their income tax returns and pay tax on it.
In the event that the house is sold no capital gains tax is paid by the trust. Rather the trust will distribute the capital gain to the beneficiaries and then they will include this capital gain in their assessable income in their income tax return and pay income tax. As the property has been held for some time, a 50% CGT discount should be available which will reduce the capital gain to be included in the returns of the beneficiaries. For example if the capital gain is $300 and two beneficiaries are entitled to this capital gain ($150 each) only an amount of $75 is included in the beneficiaries income tax return.
Hope this helps.