The case for removing roll-over of liability to tax on capital gains at death David Sutton and Jeremy Parker
By: Sutton, David
.
Contributor(s): Parker, Jeremy.
Material type: 
ArticleSubject(s): CAPITAL | HERENCIA | DONACIONES | DONACIONES MORTIS CAUSA | IMPUESTOS | AUSTRALIA
In:
Australian Tax Forum: a journal of Taxation Policy, Law and Reform v. 37, n. 3, 2022, p. 455-475Summary: The Australian system of taxation includes a range of preferences in taxing capital gains. One of those preferences is the roll-over of liability to tax on the part of the inheritor of capital gains made in the deceased benefactor’s lifetime. The inheritor inherits the deceased’s cost base for the purpose of capital gains tax and only becomes liable to tax when the inheritor realises the asset. The case for this treatment is based on liquidity considerations, economic considerations, sentimentality and, less commonly, on vertical equity. This review of the capital gains tax roll-over at death outlines the case for the concession, arguing that this case is substantially without merit. On this basis, the discussion concludes that the roll-over at death should be removed, with liability to tax on gains arising in the benefactor’s lifetime arising upon death. To this point, there has been limited research or discussion of this issue, but this tax preference compounds tax system complexity, reduces economic efficiency and exacerbates the contribution of the tax system to growing inequality. For these reasons, it represents an important area for the consideration of tax regime change.
| Item type | Current location | Home library | Call number | Status | Date due | Barcode |
|---|---|---|---|---|---|---|
| Artículos | IEF | IEF | OP 1867/2022/3-5 (Browse shelf) | Available | OP 1867/2022/3-5 |
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Resumen.
The Australian system of taxation includes a range of preferences in taxing capital gains. One of those preferences is the roll-over of liability to tax on the part of the inheritor of capital gains made in the deceased benefactor’s lifetime. The inheritor inherits the deceased’s cost base for the purpose of capital gains tax and only becomes liable to tax when the inheritor realises the asset. The case for this treatment is based on liquidity considerations, economic considerations, sentimentality and, less commonly, on vertical equity. This review of the capital gains tax roll-over at death outlines the case for the concession, arguing that this case is substantially without merit. On this basis, the discussion concludes that the roll-over at death should be removed, with liability to tax on gains arising in the benefactor’s lifetime arising upon death. To this point, there has been limited research or discussion of this issue, but this tax preference compounds tax system complexity, reduces economic efficiency and exacerbates the contribution of the tax system to growing inequality. For these reasons, it represents an important area for the consideration of tax regime change.
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