The ‘double death tax’ trap: How estate delays can cost you thousands

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Delays in administrating an estate can now have huge tax consequences according to the ATO’s latest draft ruling, which will tax everything from the family home to wedding rings if a second parent dies before the estate of the first parent is finalised.

When CGT was introduced in 1985, the voting public still had memories of the financial hardship caused by death taxes in the past. It was certainly a dirty word. Paul Keating wanted to be clear that CGT was not a death tax by another name.

Section 128 of the Income Tax Assessment Act allows a deceased’s assets to be transferred to a beneficiary without any CGT consequences. The beneficiary is treated as if they have owned the asset in the same way as the deceased, they inherit the deceased’s cost base. It also allows the deceased’s home to transfer with a cost base of market value at date of death.

The sticking point is that the........

© The Age