Must widow pay tax on share portfolio?

I am an 81-year-old selffunded retiree. I have recently lost my husband (we have just celebrated our 60th wedding anniversary). He had a small share portfolio which I have inherited. Please advise if there are any tax implications in transferring the shares to me, given that he held the shares for many years and there would be capital gains involved. Since I do not have taxable income above the tax threshold, I do not lodge a tax return.

Please accept my condolences. There are several matters to consider, with the first being the original purchase date of the shares. If this was pre-20 September 1985, there would be no capital gains tax implications at all. For shares purchased after that date and given there will be a change in beneficial ownership to yourself, you would need to consider the difference between the original purchase price and the value of the shares as at your late husband’s date of death to understand the gross capital gain. The net capital gain would then be 50 per cent of this amount, but would only be assessable for taxation purposes should you be selling the shares. Should you be retaining the shares, the capital gain would be assessable upon your eventual disposal of the shares. It would be appropriate to engage an accountant or a licenced tax advisor to understand the capital gains tax implications prior to any eventual disposal of the shares. You may be able to use the Seniors and Pensioners Tax Offset [SAPTO] and not have to pay capital gains tax at all.

My wife will inherit about $150,000 from her late father’s estate – there was no property/shares involved. We are both retired and do not receive any Centrelink support, only pensions from abroad as well as Australian superannuation. We want to give both of our sons $18,000 each. Would they pay tax if these funds were transferred into their bank accounts? Alternatively, what if we gave the sums in cash? Finally, should we place my wife’s remaining balance into a bank account or a term deposit?

Here in Australia there are no gift duties and therefore you are able to gift funds to your children without any issues. Whether they pay tax or not would depend on how they invest or use the money that they receive. Receiving the funds is not considered income. From a safety perspective, my suggestion would be electronic funds transfer. Where you place the remaining funds depends entirely on what you have planned for the money going forward. Retaining funds in a bank account or term deposit would allow you relatively easy access [term deposit terms notwithstanding] and would be a secure investment.

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Brenton is a director and an authorised representative of Goldsborough Financial Services Limited. His advice should be considered as an opinion. Readers should consider engaging their own personal financial adviser. Questions and answers may have been edited for length.