- Generally, there is no CGT when a business or shares pass to the executor and then to a beneficiary. The tax question comes later, on a sale.
- If the deceased acquired the asset before 20 September 1985, the beneficiary's cost base starts at market value on the day they died.
- If they acquired it on or after that date, the cost base generally carries over from the deceased, so their records matter more than a date of death value.
- A date of death value is also used where an asset passes to a foreign resident or a tax-advantaged entity in some cases.
- The executor and their adviser decide what applies. We value the business or interest at the date they give us.
What happens to CGT when someone dies
When a person dies, their assets pass to their legal personal representative, usually the executor, and then to the beneficiaries. In general terms:
- Any capital gain or loss when the asset passes to the executor is disregarded.
- Any capital gain or loss when the executor passes the asset to a beneficiary is generally disregarded too.
- The executor or beneficiary is taken to have acquired the asset on the date of death.
The gain is not wiped out. It is deferred until the executor or beneficiary later sells or otherwise disposes of the asset. What matters then is the cost base they inherited, and that is where a valuation may come in.
If the executor sells a business asset to pay debts or wind up the estate, rather than passing it on, that sale is subject to the normal CGT rules.
Which cost base the beneficiary starts with
This depends mainly on when the deceased acquired the asset.
Acquired before 20 September 1985
The asset was a pre-CGT asset in the deceased's hands. The first element of the beneficiary's cost base is the market value of the asset on the day the deceased died. If the deceased made a major improvement on or after 20 September 1985, the asset and improvement are treated as one asset, valued together at the date of death.
For a family business or company shares held since before 1985, this date of death value can be the single most important number in the later CGT calculation.
Acquired on or after 20 September 1985
The first element of the beneficiary's cost base is generally the deceased's own cost base on the day they died. Here, a date of death value is usually not what sets the cost base. The deceased's records are: what they paid, when, and what they spent on the asset since.
The executor's own costs that would have formed part of the cost base, such as certain legal costs, can generally be added by the beneficiary.
When the asset leaves the CGT system at death
The ATO says CGT applies to the deceased at the time of death, using the market value at the date of death, in some cases. These include where the deceased was an Australian resident and a post-CGT asset passes to a foreign resident beneficiary and is not taxable Australian property in their hands, and where an asset passes to a tax-advantaged entity such as a charity or complying super fund. Any gain goes in the deceased's date of death tax return, so the executor needs the value.
The small business concessions after a death
The ATO's guide says the executor or a beneficiary may be able to use the small business CGT concessions where the asset is sold within two years of the death, or a longer period the Commissioner allows, and the asset would have qualified if the deceased had sold it just before death. Some of those tests use market values, such as the maximum net asset value test. Your adviser decides whether the concessions apply.
Valuing at the date of death
A date of death valuation is a valuation at a past date. The valuer works from what was known or knowable at that date, not from what happened later. If the business declined because the owner was no longer there, that may or may not have been foreseeable at the date. The report explains the approach taken.
For shares or units, the parcel is valued as it was held by the deceased, taking into account control, share rights and the company's or trust's own position. More on our retrospective valuation page.
What the valuation report covers for this purpose
For a deceased estate, the Professional Valuation Report sets out:
- the business, shares or units valued, and who held them at death
- the date of death as the valuation date
- market value as the standard of value
- the information that was known or knowable at that date, and how later events were treated
- the method, earnings, adjustments, evidence, assumptions and limitations
- the signature of the valuer responsible
The ATO decides for itself whether to accept a valuation. Its guidance says acceptability usually depends on the process followed rather than who conducted it, though some tax purposes require a particular type of valuer. Your adviser tells you if yours does.
What we need from you
- The date of death and a note from the executor's adviser on the purpose
- Financial statements and tax returns for the years around the date of death
- Management accounts, if any, close to the date
- The share or unit register, constitution or trust deed, or partnership agreement
- When and how the deceased acquired the business or shares, if known
- Leases, key contracts and anything showing how the business was trading at the time
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General information only, current at 10 November 2026. We value businesses and business interests; we do not give tax advice. Your accountant or tax adviser decides whether a rule applies to you.