A reader who asked whether bequeathing shares in a will incurs capital gains tax drew a response that exposed disagreement even among advisers. Whittaker noted that the reader's financial adviser disputes the column's earlier warning that transfers bequeathed under a will could trigger a capital gains tax event after July 1, 2027.
Julia Hartman of the BANTACS accountants group said it could be argued both are right, given the confusion surrounding the budget changes. Under current legislation, an estate is liable for tax on deferred capital gains accrued up to the date of death if death occurs after July 1, 2027, because death is treated as a realisation event for pre-2027 gains, included in the date-of-death tax return. Assets are deemed to have been sold and reacquired at market value on July 1, 2027, with the resulting capital gains tax deferred, and the normal rollover provisions do not apply because the person was alive when those gains were calculated and deferred.
The government acknowledged problems with the rollover provisions in the explanatory memorandum to the second tranche of legislation, released in August, and indicated they would be addressed in future amendments. When the third tranche was released in October, the problem remained, with another assurance it would be fixed later. Whittaker wrote that the adviser may have more faith in the government's promises than Hartman does, while his own earlier remarks reflect the legislation as it stands rather than what the government says it intends to do.
On transferring Commonwealth Bank shares bought in 1991, Whittaker said an off-market transfer is still a disposal for capital gains tax purposes even if the shares are gifted, and is generally treated as taking place at market value. Transfers before June 30, 2027 face the normal rules, including the 50 per cent discount. After that date, the gain accrued up to June 30 retains the discount, while any subsequent gain is subject to the new rules, including cost base indexation and a minimum 30 per cent tax rate.
The column also explained the Seniors and Pensioners Tax Offset, noting self-funded retirees who have reached age pension age can qualify. For the 2025-26 financial year, a couple must have a combined rebate income below $87,620, with a maximum offset of $1,602 for each partner, applying where each partner's rebate income is no more than $30,994, while an individual offset cuts out at $43,810. The test is based on rebate income, which can include reportable super contributions and net investment or rental losses, rather than taxable income alone, and retirement-phase super payments are generally tax-free and do not count toward it.
A fourth question concerned an 80-year-old woman planning to sell her home for about $700,000. The assets test threshold for a full age pension for a single non-homeowner is $600,000, and Centrelink's gifting rules allow $10,000 a year up to $30,000 over five financial years, with any excess still counted as an asset and deemed to earn income for five years. If she gave away $120,000, her assessable assets would still be about $710,000, producing a pension of about $878.80 a fortnight, below the full rate but retaining associated concessions. Cash gifts generally attract no tax.