Dead people are failing to pay tax on investments

You can take it with you 

 In Australia you can maintain your investments in shares long after you have died. 

For example, a man who lived in Melbourne, let's call him "Peter", died in December 2013 owning a number of shares in a large Australian company. 

Nine years after Peter died, in 2022, his shares were bought by a German company that compulsorily acquired shares owned by everybody, including people who had died and, like Peter, continued to own shares in the same Australian company. Peter was paid a little over $200,000 for his shares. He did not actually receive any money, because he died in 2013. 

Whether Peter is now liable to pay capital gains tax as a result of his shares being sold is not certain. 

Do dead people have to lodge tax returns and pay capital gains tax on the sale of shares they own after they have died? 

This is an extract of a letter sent to Peter and other shareholders to inform him that his shares were being sold. The extract was copied from this Listcorp web page.

29 April 2022 

Dear Sirs/Madams

HOCHTIEF Australia Holdings Limited – Compulsory acquisition of shares in CIMIC Group Limited (ASX: CIM) following takeover bid 

We act for HOCHTIEF Australia Holdings Limited ACN 103 181 675 ("HOCHTIEF"). 

We refer to HOCHTIEF's off-market takeover bid for all the ordinary shares in CIMIC Group Limited ACN 004 482 982 ("CIMIC") in which it does not already have a relevant interest which will close at 7.00pm (Sydney time) on10 May 2022 ("Offer"). 

As at the date of this letter, HOCHTIEF has a relevant interest in at least 90% of the ordinary shares in CIMIC and at least 75% of the ordinary shares in CIMIC that HOCHTIEF offered to acquire under the Offer. Accordingly, in accordance with Part 6A.1 of the Corporations Act 2001 (Cth) ("Act"), HOCHTIEF is exercising its right to commence the process of compulsorily acquiring the remaining ordinary shares in CIMIC in which it does not already have a relevant interest. 

In accordance with section 661B(1)(d) of the Act, we enclose:

1. a letter to the remaining holders of ordinary shares in CIMIC; and
2. an ASIC Form 6021: Notice of Compulsory Acquisition Following Takeover Bid,

(together the "Documents"). 

The Documents were lodged with the Australian Securities and Investments Commission and sent to CIMIC today, and will be dispatched to the remaining CIMIC shareholders in accordance with section 661B(1)(c) and 661B(2)of the Act.

Home Energy Storage Module at half the price of Battery Energy Storage

No need for cold showers 

Suppose a manufacturer made a simple home energy storage module that cost about half the price of a Battery Energy Storage System with similar capacity. 

The module would be designed to store 10 kWh of output from a rooftop solar PV system - avoiding the need to export the 10 kWh for just a few cents for a feed-in-tariff. If your Feed-in-Tariff is 5 cents per kWh, you would forego this income by saving the energy and not exporting it. (This costs 50 cents per day for the 10 kWh that is stored in the module). 

The module would avoid the need to purchase about the same amount of energy that it stored each day.  If the retail price is 40 cents per kWh that you buy, then you could save this expense by using the 10 kWh of stored energy. (This saves $4 per day for the 10 kWh stored in the module).

A saving of $3.50 per day adds up to about $1,260 a year. In 5 years you should expect to save over $6,000 in energy bills. 

This saving is about the expected cost of the Home Energy Storage Module that could store 10 kWh. 

The energy stored in the Home Energy Storage Module provides enough energy each day to heat hot water used on average by a household of 3 (around 60 litres of hot water per person each day). 

Because this stored energy is very cheap rooftop solar PV energy that would have to be exported for a low Feed-in-Tariff if it was not stored, there is no need, and little additional saving, in upgrading to a Hot Water Heat Pump System that costs around $5,500. 

Cold water flows through the heat energy storage module where it is preheated, thanks to solar PV electricity that would otherwise have been exported for only a 2 to 5 cents feed-in-tariff, and then flows into an existing hot water system. 

The existing hot water system will use little energy, either electricity or natural gas, when the water has been preheated by the heat energy storage module. Any time there is insufficient solar PV electricity, the existing hot water system will use a little more energy than usual. There will be no shortage of hot water because of a few cloudy days.  

A heat energy storage module to preheat water and store solar PV output

 

Arithmetic and Value for Money 

An web page by the ACT Government "Singing in the shower – a guide to hot water heat pumps" recommends an upgrade to a Hot Water Heat Pump System. It includes some calculated annual energy cost comparisons and concludes the system cost of a system to heat 300 litres a day will be recovered in 5 to 6 years. 

These calculations require an assumption about estimating the savings if the heat pump is to heat 300 litres of water a day. The comparison doesn't say what the assumptions are, or that on average, people use about 60 litres of hot water a day. If the Hot Water Heat Pump System is used to provide hot water for a home with 5 residents, the calculations are reasonable and the pay back period is likely to be around 5 to 6 years. 

However, if only two people occupy the premises with the Hot Water Heat Pump System then the energy savings are for heating only 120 litres of hot water a day. With these lower savings, it would take 12 to 16 years for the savings to equal the cost of the Hot Water Heat Pump System. 

The cost of a battery and a heat pump can be avoided with a much cheaper, and simpler appliance to store surplus solar PV electricity, and provide a return on the investment a lot faster. 

See for example "heatBoxx : Optimized & effective heat storage made to measure", an application using phase change materials such as soy wax to store thermal energy that is used to preheat hot water before it enters your existing gas or electric hot water system. 

If there is plenty of stored thermal energy in molten wax inside the thermal energy store, your existing hot water system will use little or no energy to finish heating the water to the required temperature. If there has been a long run of cloudy days, your existing hot water system will use a little more energy and still ensure adequate hot water is available.  

New replacements for natural gas

A great many gasification technologies exist - all of which were developed before the price of solar PV panels fell dramatically. 

 This fall in the price of solar PV panels  has ground-breaking implications for natural gas replacements. 

All plant material is assembled inside plant cells from water and carbon dioxide using solar energy. The process is photosynthesis and it stores solar energy. Bush fires burn ferociously because of the amount of solar energy stored in plant material such as leaves, wood and grass. 

All reactions that store solar energy in plant material are minor variations of:

• One molecule of carbon dioxide from the air is split into a carbon atom and an oxygen molecule, 
• The oxygen molecule is released into the atmosphere, and 
• The carbon atom is added to a cross-linked molecule of plant material (such as cellulose or lignin) together with one molecule of water.

This simplified model could be represented:

(CH₂O)_n + CO₂ + H₂O =>  (CH₂O)_(n+1) + O₂

The resulting plant material can be considered approximately to be cross-linked collections of carbon atoms with one water molecule for each carbon atom. 

Because of the collapse in the price of solar PV panels, all existing methods of making replacements for natural gas from plant material use some of the energy embedded in the plant material, creating carbon dioxide and methane. 

It is inevitable that the methane created embodies LESS energy than was present in the plant material. 

The low cost of solar PV panels crucially changes the feasible processes for making methane from plant material. 

The plant material can be reacted with pure hydrogen, and NOT oxygen, to make methane and water vapour at a high temperature. 

The water vapour can be split into hydrogen and oxygen molecules with high-temperature electrolysis with electricity generated solar PV panels. 

The hydrogen produced by high-temperature electrolysis of water vapour is reacted with more plant material, continuing the conversion of all the available plant material is converted into methane and oxygen. 

There is no carbon dioxide produced, so no carbon dioxide storage is required and the cost of storing carbon dioxide is avoided. 

The methane produced embodies the energy that was available in the plant material PLUS additional energy from the solar PV panels used to electrolyze water vapour into hydrogen and oxygen. 

 

Further reading: "Coupling hydropyrolysis and vapor-phase catalytic hydrotreatment to produce biomethane from pine sawdust" at https://pubmed.ncbi.nlm.nih.gov/37423544/ .