Private ruling: Small business concessions
Date of advice: 19 November 2015
Published: January 2016
Ruling period: Year ended 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Will the Commissioner exercise his discretion under subsection 152-80(3) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the time limit to 31 December 2015 to allow the small business capital gains tax (CGT) concessions to be applied? | A1: Yes.

Relevant facts and circumstances: The deceased passed away during the relevant financial year. The deceased was over 55 years of age at the date of their death. The deceased owned shares in a company. At the time of the deceased death they had owned their shares for over 15 years. The deceased's will bequeathed shares to you. You now wish to dispose of the shares and exit the business. The deceased met the basic conditions of relief and had owned the shares for more than 15 years, in which they had been considered an active asset for the entire time. The company had a significant individual for periods totalling at 15 years during the time the deceased owned the shares. The deceased's will was contested by another family member. This delay resulted in the deceased's estate not being finalised until more than two years after the deceased's death. The transfer of shares will take place immediately after the private ruling has been issued.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 152-80

Reasons for decision: Summary: Section 152-80 of the Income Tax Assessment Act 1997 (ITAA 1997) allows either the legal personal representative of an estate or the beneficiary to apply the small business CGT concessions in respect of the sale of the deceased's asset in certain circumstances. Specifically, the following conditions must be met: • the asset devolves to the legal personal representative or passes to a beneficiary • the deceased would have been able to apply the small business concessions themselves if they had disposed of the asset immediately prior to their death, and • a CGT event happens within 2 years of the deceased's death unless the Commissioner extends the time period in accordance with subsection 152-80(3) of the ITAA 1997. In determining whether the discretion to allow further time would be exercised, the Commissioner has considered the following factors: • evidence of an acceptable explanation for the period of the extension requested (and whether it would be fair and equitable in the circumstances to provide such an extension) • prejudice to the Commissioner which may result from the additional time being allowed (but the mere absence of prejudice is not enough to justify the granting of an extension) • unsettling of people, other than the Commissioner, or of established practices • fairness to people in like positions and the wider public interest • whether any mischief is involved, and • consequences of the decision. In this case, we consider that you have provided a reasonable explanation for the delay in the disposal of the CGT asset. Considering the timeframe involved, we do not consider that allowing this request would cause the unsettling of others. Accordingly, the Commissioner will exercise his discretion under subsection 152-80(3) of the ITAA 1997 to extend the time period to 31 December 2015 .