Exemption on Retirement, Death or Disablement
23.55. It is important that there be a concession, available on the death of the taxpayer, to give some relief to the
estate from what might be a heavy liability to capital gains tax arising from the deemed realisation at death. It is
also reasonable that there be some relief to the taxpayer who, as a result of retirement or permanent incapacity, will
be realising capital gains after he ceases to be employed or retires from his business or profession. Accordingly, it
is proposed that there should be an exemption from capital gains tax of a specified amount of gains realised after
attaining the age of 65 or upon permanent incapacity or deemed to be realised at death. The amount should be revised
at regular intervals in the light of the rate of inflation: a figure of not less than $40,000 might be appropriate
under present circumstances. In the case of gains
― 426 ―
deemed to be realised at death, the exemption will apply
no matter what relationship the beneficiaries bear to the deceased, but in the majority of cases it could be
anticipated that the exemption will ensure to the benefit of the deceased's spouse and children. The total amount of
exemption will be limited and, to the extent that it has been used during the deceased's life, it will not be
available on death.
23.56. The Budget proposals do not envisage any exemption from capital gains tax in respect of gains realised after retirement or deemed to be realised at death. This is unduly harsh, particularly in view of the fact that many taxpayers, especially those in the lower income brackets, may not realise any gains during their lifetime but may have accrued gains at death. The liability for capital gains tax on the whole of such accrued gains is likely to impose liquidity strains on the estate, with concomitant hardship for dependants.