Does bequeathing my shares in my will incur capital gains tax?

Opinion

October 28, 2026 — 5:00am

You recently wrote that transferring shares bequeathed under a will could trigger a capital gains tax event after July 1, 2027. My financial adviser says this is not the case. Has the proposed legislation changed since August?

Julia Hartman of BANTACS accountants group says it could be argued that we are both right, such is the chaos surrounding the budget changes. Under the current legislation, if you die after July 1, 2027, your estate will be liable for tax on deferred capital gains accrued up to that date.

This is because death is treated as a realisation event for pre-2027 gains, which would therefore be included in your date-of-death tax return. The problem arises from the rules that effectively deem assets to have been sold and reacquired at market value on July 1, 2027, with the resulting capital gains tax deferred.

The normal rollover provisions do not apply because you were alive when those gains were calculated and deferred.

In the explanatory memorandum accompanying the second tranche of legislation, released in August, the government acknowledged problems with the rollover provisions and indicated that they would be addressed in future amendments.

However, when the third tranche was released in October, the problem remained unresolved, with another assurance that it would be fixed later. With the deadline now just eight months away, and the necessary amendments likely to be complex, Julia is understandably sceptical.

Your adviser may have more faith in the government’s promises than Julia does. Meanwhile, my earlier remarks reflect the legislation as it stands, rather than what the government says it intends to do.

I’m doing my tax return and have just noticed something called the Seniors and Pensioners Tax Offset (SAPTO). Have you written about this? My wife and I are both 67 and self-funded retirees. As usual, the information is confusing. Are we eligible even though neither of us receives the age pension?

Yes, you may well be eligible. Despite its name, SAPTO is not restricted to people receiving the age pension. Self-funded retirees who have reached age pension age – currently 67 – can also qualify, provided they meet the Australian residency requirements and the SAPTO income test.

For the 2025-26 financial year, a couple living together must have a combined rebate income below $87,620 to qualify. The maximum offset is $1602 for each partner, although it reduces as individual income rises and disappears once the relevant limits are reached.

The maximum applies where each partner’s rebate income is no more than $30,994, while an individual offset cuts out at $43,810. SAPTO reduces income tax payable; it is not a cash payment and cannot generate a refund by itself.

The important distinction is that the test is based on rebate income, which may include amounts such as reportable super contributions and net investment or rental losses, rather than taxable income alone.

Also, if your superannuation is in retirement phase, pension payments and investment earnings within the fund are generally tax-free and do not count towards your personal rebate income. This means some self-funded retirees with substantial superannuation balances can still qualify.

The ATO calculates the offset from the information in your tax return, including your spouse’s details. It’s certainly worth checking before you lodge.

I have some Commonwealth Bank shares I bought in 1991, and I am considering transferring some to family members this financial year by way of off-market transfers. What would be the capital gains tax implications if I transfer them now, and how would the position change if I wait until after June 30, 2027?

An off-market transfer is still a disposal for capital gains tax purposes, even if the shares are gifted to family members. The transfer is generally treated as taking place at market value.

If you transfer the shares before June 30, the normal capital gains tax rules will apply, including the 50 per cent discount. If you wait until after that date, the gain will be divided into two components.

The gain accrued up to June 30 will retain the existing 50 per cent discount, while any subsequent gain will be subject to the new rules, including cost base indexation and a minimum 30 per cent tax rate.

Given that you will have held the shares for 36 years by June 2027, most of the capital gain is likely to fall under the existing rules, particularly if you transfer them soon after that date.

My mother-in-law is 80 and plans to sell her home soon for about $700,000. She has no other savings or assets and wants to retain her full age pension. I understand she can have up to $580,000 in cash and investments without affecting her pension. If she gives the balance of the sale proceeds to her children and grandchildren, would there be any tax implications or consequences for her age pension?

The assets test threshold for a full age pension for a single non-homeowner is $600,000. If she has $580,000 in cash and investments, that leaves $20,000 for personal possessions such as furniture and a motor vehicle.

However, Centrelink has strict gifting rules. She can give away $10,000 in a financial year, up to a maximum of $30,000 over five financial years. Any excess continues to count as an asset and is deemed to earn income for five years.

Therefore, if she gives away $120,000, her assessable assets would still be approximately $710,000, assuming $20,000 for personal possessions and no selling costs. Based on your calculations, she should receive a pension of about $878.80 a fortnight, somewhat less than the full pension, but she would retain the associated concessions.

There is generally no tax on making a cash gift, and the tax payable on her remaining investments would depend on where the money is invested. Given the available tax offsets, I doubt it would be a major consideration.

Noel Whittaker is the author of Retirement Made Simple and other books on personal finance. Email: noel@noelwhittaker.com.au.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

Expert tips on how to save, invest and make the most of your money delivered to your inbox every Sunday. Sign up for our Real Money newsletter.

From our partners