GST and Death If a person is registered for GST and they die there could be adjustment issues as death causes their GST registration to be cancelled. Example Doug is a handyman and operates as a sole trader. He had just purchased a ute for $19,000 on 30 June 2016 and claimed back $1,727 in GST. Unfortunately, Doug dies on 30 July 2016, sadly not getting to use his new ute too much. Doug’s will leaves all his vehicles to his sister Claudia. The ute’s value is considered to be $17,000 GST inclusive and since there is a disposal the GST claimed will have to be paid back to the ATO in part. The adjustment calculation will be 1/11 x 100% (business use) x $17,000 = $1,545 The executor of the estate will be liable to pay back this amount, $1,545, to the ATO. Who ultimately wears this cost will depend on the terms of the will. It may come out of residue of the recipient of the gift may find any taxes go with the gift – but this will depend on the wording – is this a tax, maybe not. The situation would have been different had Doug been operating the business through a company or trust as these would keep going if he died. However, if the person who took control of the company or trust caused the car to be sold a similar outcome would have resulted.
Importantly the executor of the estate may not need to register for GST as the estate does not expect to make taxable supplies in the course of an enterprise. Perhaps no adjustment can be made ? Many issues arise on death that cannot be completed by the deceased. That is also why CGT doesnt actually apply to death. ATO acknowledges that a GST adjustment on death of a sole trader is not required here Adjusting for assets retained after cancelling GST registration | Australian Taxation Office
What would happen if Doug who maybe works under the abn system as a sole trader,also had a small equities set-up all in his name.. And i asked this question to a lot of different people some legal some accountants ,do the shares just transfer into the wife name or does this trigger GST,i asked the question too the accountant who bought out the previous accountant a few months ago,and said he was unsure,the previous one long term said no,and the more i read about wills the more one would want to have a rock solid one set-up..
Thanks Terry,yes blue chip equities that,s what i thought,plus not trying to slip a freebee question under the carpet...
Do you mean capital gains tax (CGT) ? On death, shares are an estate asset. The will (if there is one) or rules of intestacy setout what happens to the shares. If they transfer to the spouse (or any beneficiary) the CGT rules apply and the beneficiary inherits them with the cost base determined by tax law. There is no GST applicable to shares.
