Capital gains tax: How a simple mistake cost this taxpayer $200,000 in inheritance

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Income tax

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How a simple mistake cost this taxpayer $200,000 in inheritance Advertisement

Good record-keeping has always been important when it comes to keeping on top of your tax affairs, and a recent dispute between the ATO and a taxpayer has demonstrated exactly why.

The taxpayer, one of four children, is set to lose 80 per cent of her inheritance because the tax office will not accept that she held the family home in trust for her parents.

With each child getting 25 per cent of the sale proceeds, this will leave the daughter an inheritance of only $50,250 after she pays the tax. Credit: AFR

Capital gains tax (CGT) legislation recognises that a property held by a trustee is considered the property of the beneficiary so can be covered by their