Capital Gains Tax in Deceased Estates: Common Executor Mistakes

Overview: CGT and Deceased Estates

CGT applies when a CGT event happens to a CGT asset — broadly, almost any property, including real estate, shares, units, crypto-assets, business goodwill and collectables. The most common event in an estate is CGT event A1, the disposal of an asset (s 104-10). For a sale under a contract, event A1 happens when the contract is made, not at settlement (s 104-10(3)). That date fixes the income year in which the gain is taxed and is the date used for the 12-month discount test.

Three different taxpayers can be involved: the deceased (whose date of death return covers income and any CGT event K3 up to death), the executor as trustee of the estate (who reports gains made during administration), and the beneficiary (who pays CGT when they later dispose of an inherited asset). Getting the right gain into the right return is the starting point.

Division 128 Rollover Relief

Division 128 of the ITAA 1997 is the central set of rules for CGT assets the deceased owned just before death. Its key features are:

• a capital gain or loss from a CGT event that results from the person's death is disregarded (s 128-10), except for CGT event K3;
• the asset is taken to have been acquired by the executor (and later the beneficiary) on the day the person died (s 128-15(2));
• the executor disregards any gain or loss when the asset passes to a beneficiary (s 128-15(3));
• the first element of the cost base is fixed by the table in section 128-15(4) — the deceased's cost base, or market value on the day of death, depending on the asset (see below);
• surviving joint tenants are taken to acquire the deceased's interest on the day of death, with similar cost base rules (s 128-50).

An asset "passes" to a beneficiary for these purposes if it goes to them under the will (including a will varied by court order), under intestacy, by appropriation in satisfaction of a legacy or other entitlement, or under a qualifying deed of arrangement where the only consideration is the variation or waiver of a claim to estate assets (s 128-20). A transfer outside those categories — for example, a sale of an estate asset to a beneficiary under the executor's power of sale — is not covered (s 128-20(2)).

When CGT Applies at Death: Charities, Super Funds and Foreign Beneficiaries

CGT event K3 (s 104-215) is the main exception to the "no CGT on death" rule. It happens if an asset the deceased acquired on or after 20 September 1985 (s 104-215(5)) passes to a beneficiary who, when the asset passes, is:

• an exempt entity, such as a tax-exempt charity (s 104-215(1)(a));
• the trustee of a complying superannuation entity — a complying superannuation fund, complying approved deposit fund or pooled superannuation trust (s 104-215(1)(b)); or
• a foreign resident beneficiary, where the deceased was an Australian resident and the asset is not taxable Australian property in the beneficiary's hands (s 104-215(2); listed shares held as a portfolio interest are a common example).

The event happens just before death, and the gain or loss is worked out using the asset's market value on the day of death (s 104-215(3)-(4)) and is reported in the deceased's date of death return, so the tax is borne by the estate as a whole, not by the receiving beneficiary. A gain on a testamentary gift is disregarded where the gift would have been deductible under section 30-15 had it not been testamentary (s 118-60(1)); a separate rule covers Cultural Gifts Program gifts (s 118-60(2)). When a will leaves significant post-CGT assets to a charity, a super fund or a beneficiary living overseas, the executor should identify the K3 exposure before distributing, and a market valuation of the affected assets will be needed.

Assets Acquired Before Death

For assets the deceased owned at death, the table in section 128-15(4) sets the first element of the cost base in the hands of the executor and the beneficiary:

The executor or beneficiary is always taken to have acquired the asset on the day of death (s 128-15(2)). The last column shows a separate rule: for the CGT discount only, section 115-30 treats a post-CGT asset as acquired when the deceased acquired it. Two consequences are often missed. First, a pre-CGT asset is fresh in the estate's hands: any gain from death onwards is taxable, and because the asset is treated as acquired at death, a sale contract signed within 12 months of death gets no CGT discount. Second, for a post-CGT asset the gain the deceased built up during life is not wiped out — it carries over to the executor and beneficiary through the inherited cost base.

The deceased's cost base may itself have been adjusted during life — for example, by a market-value reset under section 118-192 when a home was first used to produce income after 20 August 1996, by capital works deductions the deceased claimed (s 110-45(4)), by earlier rollovers or by cost base adjustments for tax-deferred distributions. Those adjustments carry over too.

Assets Acquired After Death

Division 128's cost-base and transfer rules apply to assets the deceased owned just before death. Assets the executor acquires during administration are the estate's own acquisitions: they are acquired when the estate acquires them, at what the estate pays, and a later sale is a CGT event in the estate. If such an asset is distributed to a beneficiary, section 128-15(3) does not disregard the gain, so a CGT event may happen on the distribution and the market value substitution rules may apply. Common examples are:

• DRP shares allocated after death under a dividend reinvestment plan;
• shares or units bought with estate cash during a long administration; and
• units issued on a distribution reinvestment by a managed fund after death.

Corporate actions on inherited shares do not all follow the same rule, so they should not be treated automatically as fresh estate acquisitions:

• Bonus shares issued on inherited shares are dealt with under Division 130. Where no dividend is involved, they are generally treated as acquired when the original shares were acquired, with the cost base spread across the original and bonus shares (s 130-20); different rules apply if the bonus issue is a dividend or if an amount is payable.
• Rights issues: the right is generally treated as acquired with the original shares, but shares acquired by exercising the right are acquired at exercise, with a cost base including the exercise price (s 130-40).
• Demutualisation shares (for example, of an insurer) are governed by special statutory rules that set their acquisition date and cost base.

Registry statements will show each event; the executor's accountant should apply the specific provision to each one rather than a single rule.

Cost Base Issues

The cost base of an inherited post-CGT asset is built from the five elements in section 110-25 as they stood in the deceased's hands — acquisition cost, incidental costs, certain non-deductible costs of ownership (for assets acquired after 20 August 1991), capital expenditure to increase or preserve value, and capital expenditure to establish or defend title — less any amounts that must be excluded or reduced (s 110-45). The executor's first job is to reconstruct it:

• the deceased's purchase contract, contract notes or settlement statements;
• stamp duty, legal fees and other incidental acquisition costs;
• capital improvements, with dates and invoices;
• capital works and depreciation claims made by the deceased;
• non-deductible holding costs that may be included (s 110-25(4)), if not deductible and the asset was acquired after 20 August 1991;
• prior CGT events and adjustments — part-disposals, rollovers, demergers, return of capital and tax-deferred distributions.

The executor's own capital costs can also count. The ATO accepts that legal costs incurred to defend the will or title to estate assets can form part of the cost base of the estate's assets, and that a beneficiary can include costs the executor incurred that would have formed part of the executor's cost base, such as conveyancing on the transfer. Where the deceased's records are incomplete, engage an accountant early: reconstructing a cost base from registry histories, title searches and bank records is far easier in the first months than years later.

A date-of-death valuation is not required for every asset. It is needed where market value at death is the cost base (a pre-CGT asset or a qualifying main residence), where CGT event K3 applies, or where a partial main residence calculation depends on it. Even where it is not strictly needed, a contemporaneous valuation can be useful evidence if a sale outcome is later uncertain.

Main Residence Exemption Considerations

The deceased's home needs the most careful analysis. Section 118-195 disregards a gain or loss on a dwelling that an individual beneficiary inherits, or that the executor holds as trustee, if at least one condition in each column of its table is satisfied and the deceased was not an excluded foreign resident just before death.

Important points on each limb:

• Use during the two years does not matter. Under the two-year limb, the dwelling can be rented out, left vacant or occupied by a beneficiary in the meantime without losing the full exemption.
• Settlement, not contract. The ATO treats the two-year limb as met where the dwelling is sold under a contract that settles within two years of death. Signing a contract inside two years is not enough if settlement is later and no extension applies.
• The occupation limb requires that the dwelling is not used to produce income during the period and that the qualifying person's occupation runs from death. The ATO accepts a person with a right to occupy who moves in as soon as practicable (for example after the grant). Draft Taxation Determination TD 2026/D1 sets out the ATO's preliminary view on when a person has a "right to occupy the dwelling under the deceased's will"; it is a draft for comment, not a final ruling.
• Foreign residency. If the deceased was an excluded foreign resident (broadly, a foreign resident for more than six continuous years) just before death, the exemption is unavailable. If the beneficiary is an excluded foreign resident when the CGT event happens, they cannot rely on their own main residence occupation (s 118-195(1A)).
• Land sold separately. The exemption generally covers the dwelling and adjacent land up to two hectares sold with it; land or a structure sold separately from the dwelling is generally not exempt.

Homes Rented Before Death and the Absence Choice

Many people move into aged care or live with family late in life and rent out their home. What is clear from the Act:

• If the deceased acquired the home before 20 September 1985, how it was used just before death does not matter for the full exemption (s 118-195(1), column 2, item 2).
• For a post-CGT home, column 2 requires that it was the deceased's main residence just before death and "not then being used for the purpose of producing assessable income".
• A person who stops living in their home can choose to keep treating it as their main residence (s 118-145(1)): for up to six years while it is rented (s 118-145(2)), and indefinitely if it is not (s 118-145(3)), provided no other dwelling is treated as their main residence for that period (s 118-145(4)).
• While that choice applies, section 118-190(3) requires the rental use to be ignored, to the extent the home was not used to produce income before the person moved out. Note 2 to section 118-195(1) refers expressly to sections 118-145 and 118-190 as cases where income-producing use can be disregarded.

Read together, those provisions support the full exemption where the absence choice is available for the whole period of absence and the home is disposed of within two years of death (or an extended period). No ATO ruling or court decision addressing that combination was located, so the facts supporting the choice (the date the deceased moved out, rental dates, and the absence of any other main residence) should be documented. Where the choice is not available — for example, because the home was rented for more than six years, or another dwelling was the main residence — a post-CGT home does not meet column 2 and only a partial exemption under section 118-200 may be available.

The cost base is a separate question that matters only if a gain is taxable, for example where a partial exemption applies. Item 3 of section 128-15(4) gives a market-value cost base where the home was not being used to produce income just before death; section 118-190(3) is expressed to apply to the main residence rules, not to section 128-15. Whether a home rented under an absence choice qualifies for item 3 is therefore not settled, and the cost base should be confirmed with an accountant before any partial exemption is calculated.

Section 118-192 can reset the cost base where an inherited home is first rented out after death, but only if all its conditions are met: the estate or individual beneficiary gets only a partial exemption because the home was used to produce income; that use first occurred after 20 August 1996; and a full exemption would have been available had the home been disposed of just before it was first rented (s 118-192(1)). The home is then treated as acquired at that time for its market value (s 118-192(2)), and section 118-192(3) adjusts the calculation where the disposal is more than two years after death. It does not apply where the home is disposed of within the two-year period (the exemption is then full regardless of use), or where the exemption is partial for some other reason, such as days before death when it was not the deceased's main residence. Where it may apply, a valuation at the date of first rental is needed.

Partial Exemptions and Apportionment

Where the full exemption is not available, section 118-200 generally taxes the proportion of the gain referable to days on which the dwelling did not qualify. Broadly:

• the deceased's period is counted only where the deceased acquired the dwelling post-CGT, and only the days it was not their main residence (taking any absence choice into account);
• for the period after death, days count as exempt only while the dwelling was the main residence of the spouse, a person with a right to occupy, or the disposing beneficiary;
• where the cost base is market value at death under item 3, the calculation runs from death rather than from the deceased's acquisition; and
• a disposal within two years still gives a full exemption for the post-death period if the column 2 condition is met.

Because the formula depends on exact dates, records of occupation, rental periods and any absence choice should be assembled before the dwelling is sold.

Extending the Two-Year Period: PCG 2019/5

The Commissioner can allow a longer period than two years.Practical Compliance Guideline PCG 2019/5 (as amended) sets out a safe harbour that, on the ATO's guidance, applies automatically — no application is needed — if all five conditions are met:

1. during the first two years after death, more than 12 months was spent dealing with one or more listed circumstances: a challenge to the will or to ownership of the dwelling; a life or other equitable interest under the will delaying sale; complexity of the estate delaying administration; settlement of a sale contract delayed or falling through for reasons outside your control; or restrictions on real estate activity imposed by a government authority in response to COVID-19;
2. the dwelling was listed for sale as soon as practicable after those circumstances ceased to prevent a sale, and the sale was actively managed to completion;
3. the sale settled within 12 months of listing;
4. none of the following materially contributed to the delay: waiting for the market to improve, refurbishing to improve the price, inconvenience to the trustee or beneficiary in organising the sale, or unexplained inactivity by the executor; and
5. the extension needed is no more than 18 months (so the total period is no more than three and a half years).

If any condition is not met, the executor or beneficiary can ask the Commissioner to exercise the discretion. The ATO generally considers requests after the dwelling has sold and settled, and will only grant an extension for circumstances outside the taxpayer's control. Keep a dated file of the reasons for every delay from the date of death; it is the evidence either route relies on. No extension is needed where an eligible person occupies the dwelling from death until sale, or where there is no gain.

Worked Examples

The examples below are simplified, ignore incidental costs unless stated, and assume Australian-resident taxpayers. They illustrate the rules only and are not a substitute for advice on actual figures.

Example 1 — home rented after moving into aged care

Margaret bought her home in 1998 and lived in it until she moved into residential aged care in March 2022. Her executor's records show the home was rented from April 2022 and that no other dwelling was her main residence. She died in May 2025, so the home had been rented for about three years. The absence choice is made for her period of absence and the home is sold; settlement occurs in March 2027, within two years of her death. On the approach explained above, the column 2 condition is satisfied because the rental use (about three years, within the six-year limit) is ignored under the absence choice, and the column 3 condition is satisfied by settlement within two years, so the gain is fully disregarded. Because that reading is not confirmed by a ruling, the executor should document the facts supporting the choice. Had settlement occurred in, say, December 2027 without an extension, a partial exemption calculation and the cost base question discussed above would arise.

Example 2 — post-death DRP shares

Raj bought 1,000 shares in 2010 with a cost base of $20,000. He died on 10 January 2026. On 25 March 2026 a dividend was reinvested under the DRP, allocating 20 new shares at $30 ($600). The executor enters into a sale of all 1,020 shares on 15 February 2027 for $35 each.

• Inherited parcel: proceeds $35,000 less cost base $20,000 = gain of $15,000. Treated as acquired in 2010, so the 12-month test is met and the discount is available to the estate (net $7,500 if assessed to the trustee).
• DRP parcel: proceeds $700 less cost base $600 = gain of $100. Acquired on 25 March 2026, less than 12 months before the sale, so no discount.

Treating the 20 shares as part of the inherited parcel would wrongly apply the discount to them. Suspending the DRP promptly after death avoids most of the problem.

Example 3 — pre-CGT investment property sold quickly

Bill bought a rental property in 1980. He died on 1 August 2025, when it was worth $900,000. The executor signs a sale contract on 20 June 2026 for $950,000 and settles in August 2026. Because the property was a pre-CGT asset, the estate's cost base is $900,000 and the estate is treated as having acquired it at death. The contract (the time of CGT event A1) was signed less than 12 months after death, so the $50,000 gain (less selling costs) is not discounted, and it falls in the 2025–26 income year. A contract signed more than 12 months after death would have qualified for the discount and fallen in 2026–27.

Investment Properties

For an investment property the deceased bought post-CGT, the cost base carries over from the deceased, reduced by capital works deductions the deceased claimed. The 50% discount is available on a sale by the executor because the deceased's acquisition date counts. For a pre-CGT property, the cost base is market value at death and the discount is available only if the contract is signed at least 12 months after death (Example 3). If the property was at some time the deceased's home, check whether a partial main residence exemption or a section 118-192 reset applies before the calculation is finalised.

Shares and Managed Funds

For each parcel of shares or units, the executor needs to identify the acquisition date and cost base fixed by Division 128 (for inherited parcels) or by the actual acquisition (for estate parcels), and every corporate action since: mergers and scrip-for-scrip rollovers, demergers, returns of capital, bonus and rights issues and, for managed funds and stapled securities, the tax-deferred and AMIT cost base adjustments shown on annual tax statements. Distributions from managed funds after death, including any capital gains component, are estate income. Capital losses realised by the estate can be offset against its gains; the deceased's unused losses cannot (see below).

Dividend Reinvestment Plan Shares Acquired After Death

Post-death DRP shares are a frequent source of error in estate returns because they are easy to overlook: they arrive in the same holding as the inherited shares. Each allocation after death is an acquisition by the estate (or by the beneficiary, if the holding has already been transferred) on the allocation date, at a cost base equal to the reinvested dividend applied to it.

• On a sale, the inherited parcel and each post-death DRP parcel are calculated separately (Example 2).
• The discount is only available for a DRP parcel held for at least 12 months from its allocation date.
• If DRP shares are transferred to a beneficiary rather than sold, section 128-15(3) does not apply to them, so the transfer itself may give rise to a CGT event in the estate.
• Reporting post-death DRP shares as inherited shares can produce an incorrect return, with shortfall interest and possibly penalties on amendment.

The simplest precaution is to notify the share registry promptly and ask that the DRP be suspended or cancelled for the estate, and to keep every DRP advice received after death.

Estate Administration Period

During administration the executor is the trustee of the estate and is the taxpayer for CGT events on estate assets. Net capital gains form part of the estate's net income under Division 6 of the ITAA 1936. A beneficiary is generally not presently entitled to estate income until the residue has been ascertained or a specific entitlement arises, so in the early years much estate income is assessed to the trustee. The ATO's guidance on tax rates for deceased estates explains that the trustee can generally apply concessional individual rates, with the full tax-free threshold, for the first three income years of the estate (no tax offsets and no Medicare levy). From the fourth income year the trustee is still taxed under section 99 rather than at the top rate, but without the tax-free threshold: only the first $416 is tax-free, a 50% shading-in rate applies to a small band above that, and beyond that band the whole amount is taxed at ordinary individual marginal rates.

For broader context, see our articles on when an estate income tax return is required and who pays tax on estate income in Australia.

Asset Sales by Executors

When the executor sells an asset, the gain is the capital proceeds less the cost base fixed under Division 128 (or the estate's actual cost for estate-acquired assets). The contract date decides the income year and the discount test, so a contract signed on 30 June rather than 1 July moves the gain into a different year, with possibly different beneficiary entitlements and rates. Where a sale is needed to pay debts, funeral costs, tax or legacies, the executor's duty to administer the estate comes first; but the choice of which asset to sell, and when, can often be planned with the accountant.

Asset Transfers to Beneficiaries

A transfer of an asset the deceased owned at death to a beneficiary under the will, under intestacy, by appropriation or under a qualifying deed of arrangement is not a taxable event for the estate (ss 128-15(3), 128-20). The beneficiary takes over the cost base and the acquisition date for discount purposes. The relief does not cover assets the estate acquired after death, and it may not cover a transfer where the beneficiary gives value beyond the variation or waiver of a claim to estate assets. An appropriation should be authorised by the will or by law and properly documented.

Where beneficiaries receive assets with very different built-in gains, the will may need to be read carefully to decide whether the tax burden should be equalised. That is a legal question as much as a tax one.

Testamentary Trusts and CGT Issues

A testamentary trust is a separate trust that lodges its own return. An asset passing from the estate to the testamentary trustee as beneficiary carries its Division 128 cost base with it. When the trustee later disposes of an asset, the trust makes the CGT event and may be entitled to the 50% discount. A beneficiary who receives a share of a discounted capital gain grosses up the discounted amount and then applies their own discount entitlement (s 115-215): individuals and trusts may claim the discount, complying super funds receive a one-third discount, and companies receive none.

Section 102AG of the ITAA 1936 can treat income distributed from a testamentary trust to a minor as excepted trust income, taxed at adult rates. For assets acquired by the trustee on or after 1 July 2019, this applies only to income derived from property transferred to the trust from the deceased estate (or from the accumulation of that income), so it does not extend to assets later added from other sources. See our articles on testamentary trusts explained and the taxation of testamentary trusts.

Capital Gains in Estate Tax Returns

The estate's net capital gain is worked out by applying current-year and carried-forward estate capital losses first, then the discount to the remaining discountable gains. It is then included in the estate's net income.

• Present entitlement (s 97): a beneficiary presently entitled to a share of the income of the estate is assessed on that share of net income, including capital gains, unless the gain has been streamed elsewhere.
• Streaming (Subdivision 115-C): a capital gain can be taxed to a beneficiary who is specifically entitled to it — broadly, who has received or can be expected to receive an amount referable to the gain — but only if the will or trust permits it and the entitlement is recorded in the trust's accounts or records by two months after the end of the income year (s 115-228). Division 6E of the ITAA 1936 then removes the streamed gain from the ordinary Division 6 calculation.
• Trustee assessment (ss 99, 99A): net income to which no beneficiary is presently entitled is assessed to the trustee. For a trust estate resulting from a will or intestacy, the Commissioner can decide that the top-rate assessment in section 99A should not apply where that would be unreasonable (s 99A(2)), in which case section 99 applies; the ATO's guidance on deceased estates reflects that approach.

Getting these steps right requires the executor, the accountant and, where entitlements under the will are uncertain, the estate lawyer to coordinate before 30 June, not after the return is due.

Capital Losses of the Deceased and the Estate

Losses follow the taxpayer who made them. Net capital losses the deceased had unused at death can be applied only against gains in the date of death return; anything left lapses and cannot be used by the estate or the beneficiaries. Losses the executor makes during administration belong to the estate: they can be used against estate gains and carried forward within the estate, but are not passed to beneficiaries when the estate is wound up. If an estate has both gains and losses, selling loss assets in the same year as gain assets (and before distribution) can make a real difference.

Record Keeping Requirements

Section 121-20 requires records of every act, transaction, event or circumstance relevant to working out a capital gain or loss, retained for five years after it becomes certain that no CGT event can happen for which they could be relevant. For an inherited asset, the records run from the deceased's purchase through the estate to the beneficiary's eventual sale. The executor should assemble:

• the deceased's purchase contracts, contract notes and settlement statements, duty assessments and incidental cost records;
• capital improvement invoices, capital works schedules and the deceased's depreciation and capital works claims;
• share registry and broker holding statements as at the date of death, and every DRP, bonus, rights, demerger and return-of-capital statement since;
• managed fund annual tax statements showing cost base adjustments;
• date-of-death valuations where market value is the cost base or K3 applies;
• for the home: occupation history, any rental periods, any aged-care move date, and the basis for any absence choice;
• a dated log of the reasons for any delay in selling the home (for PCG 2019/5);
• sale contracts and settlement statements, and records of any specific entitlement to a capital gain;
• appropriation or transfer documents for in specie distributions, with the cost base record handed to each beneficiary; and
• the deceased's final returns and the estate's trust returns and assessments.

Executor CGT Checklist and Timeline

See also our article on distributing an estate before tax is finalised.

Common Executor Mistakes

The following problems are common in estate CGT administration and are avoidable:

• not gathering the deceased's cost base records early;
• treating post-death DRP shares, or other estate acquisitions, as inherited assets;
• treating every corporate action on inherited shares the same way, instead of applying the specific rule for bonus, rights and demutualisation shares;
• assuming a home rented before death can never be exempt, without checking the absence choice — or assuming it is exempt without checking the six-year limit and other main residences;
• measuring the two-year period to the contract date instead of settlement;
• claiming the discount on a pre-CGT asset sold within 12 months of death;
• overlooking CGT event K3 when an asset passes to a charity, super fund or foreign beneficiary;
• missing the two-month deadline to record a specific entitlement to a capital gain;
• trying to carry the deceased's unused capital losses into the estate;
• distributing the residue before the return reporting the gain is lodged, leaving the executor personally exposed; and
• not giving beneficiaries a full cost base record with in specie transfers.

Common Beneficiary Misunderstandings

Beneficiaries commonly assume that every inherited asset resets to market value at death. That is true only for pre-CGT assets and for a home that qualifies under item 3 of section 128-15(4); for most post-CGT assets the deceased's cost base carries over. They also assume an inherited home is always CGT-free, when the answer depends on when it was acquired, how it was used just before death, residency and what happens after death. And while there is usually no CGT when an inherited asset is transferred to them, the gain the deceased built up is taxed when they later sell, unless an exemption applies. Beneficiaries should ask the executor for the full cost base record as part of the distribution and keep it. See also our article on beneficiary rights during estate administration.

When Accounting and Legal Advice Should Be Obtained

Accounting advice should be obtained at the start of the administration — before any significant asset is sold, listed or transferred, and before the end of any income year in which a gain will arise. A tax-qualified accountant can confirm cost bases, check the discount and main residence position, plan the timing of sales and document specific entitlements on time.

Legal advice should be obtained whenever the tax result depends on a legal question: what the will gives each beneficiary, whether a person has a right to occupy the home, whether an appropriation or deed of family arrangement is authorised, how a testamentary trust should be set up and funded, how tax should be borne between beneficiaries, or whether a family provision claim or will challenge may delay a sale beyond two years. Our companion articles on executor duties in Victoria, probate in Victoria, what happens to a company when a director or shareholder dies and the death of a business owner in Victoria cover the surrounding administration framework.

How Parke Lawyers Can Help

We act for executors, beneficiaries, accountants and families on the legal aspects of estate administration that intersect with CGT — reviewing the sale-versus-transfer decision, documenting appropriations and in specie distributions with full cost base records, establishing and administering testamentary trusts, advising on rights to occupy and the main residence exemption, and resolving disputes about how capital gains have been dealt with. Our services in this area include probate and estate administration, wills and estate planning and commercial and business law.

Sources

• Income Tax Assessment Act 1997 (Cth), Compilation No. 267 (27 August 2026) — ss 104-10, 104-215, 110-25, 110-45, 115-25, 115-30, 115-215, 115-228, 118-60, 118-145, 118-190, 118-192, 118-195, 118-200, 121-20, 128-10, 128-15, 128-20, 128-50, 130-20, 130-40 and Subdivision 115-C
• Income Tax Assessment Act 1936 (Cth) — ss 97, 99, 99A, 102AG and Division 6E
• PCG 2019/5 (current consolidated version, as amended) — Commissioner's discretion to extend the two-year period
• TD 2026/D1 (draft) — right to occupy the dwelling under the deceased's will
• ATO — Inherited property and CGT
• ATO — Cost base of inherited assets
• ATO — How CGT applies to inherited assets
• ATO — Extensions to the 2-year ownership period
• ATO — Treating a former home as your main residence
• ATO — Tax rates for deceased estates

This article is general information only. It is not taxation advice and it is not legal advice. Capital gains tax in deceased estates is technical and depends on the facts of the individual estate. Executors and beneficiaries should obtain advice from a tax-qualified accountant and a specialist estates lawyer before selling an estate asset, transferring an asset in specie, or distributing estate income that includes a capital gain.

Frequently Asked Questions