The impact of capital gains tax on an estate can be quite profound and, unless dealt with properly in the estate planning process, can have severe consequences for both individual beneficiaries and the estate as a whole.
While Australia has no direct “Death Duty”, Capital Gains Tax has, in the past, been described as a de facto Death Duty because the full impact of the underlying tax attached to assets passing upon death is only fully revealed when the asset is actually sold or otherwise disposed of.
Therefore, it provides overall benefit for the estate if an asset with a high underlying Capital Gains Tax value is bequeathed to a beneficiary with capital losses, which can be used to off-set the Capital Gains Tax that would otherwise be payable upon the disposal of that estate asset.
Capital losses are not transferable. They are lost upon death and so capital losses need to be dealt with by the planner before the planner’s death, wherever possible. |
