Private ruling: Small business concessions
Date of advice: 25 May 2020
Published: June 2020
Ruling period: Year ending 30 June 2020
Date scheme commenced: 1 July 2019

Ruling: Q1: Will the Commissioner, pursuant to subsection 152-80(3) of the Income Tax Assessment Act 1997 (ITAA 1997), allow an extension of time to XX19 to allow the small business capital gains tax (CGT) concessions to be applied? | A1: Yes. Having considered your circumstances and the relevant factors, the Commissioner will allow an extension of time to allow the relevant small business concessions to be applied. Further information on death and the small business CGT concessions can be found on our website, ato.gov.au by searching Quick Code QC52292. | Q2: Are you entitled to the small business 50% active asset reduction and the small business retirement exemption on the sale of the half interest in the properties acquired on the death of the deceased? | A2: Yes. Having considered your circumstances and the relevant factors you are entitled to apply the CGT small business 50% reduction under subdivision 152-C of the ITAA 1997 and the small business retirement exemption under subdivision 152-D of the ITAA 1997 to the extent that the deceased would have been eligible to apply the small business CGT concessions just before they died. Refer to ato.gov.au QC52292.

Relevant facts and circumstances: You acquired farming land in partnership with your late spouse. You and your spouse acquired a further farming land. In partnership you and your spouse continuously operated a farming business as a Small Business Entity on both properties. Both properties were active business assets for in excess of seven and a half years. The farming land was later leased to other farmers. Your spouse passed away from a rare illness and their interest in the properties passed to you in accordance with the will. Following the death of your spouse you were in a state of very poor physical and mental health and you were incapable of making decisions regarding the sale of the properties. There were a number of environmental and economic factors which had caused a very depressed market for farming properties including an extended drought and bushfires. Your properties were on the market for 12 months before any offers were received. On XX19 you signed a contract to sell both properties with settlement on XX20. Your spouse met the relevant basic conditions to access the small business concessions in relation to the property just prior to their death.

Relevant legislative provisions: Income Tax Assessment Act 1997 Division 152 | Income Tax Assessment Act 1997 Section 152-80 | Income Tax Assessment Act 1997 Section 152-80(3) | Income Tax Assessment Act 1997 Subdivision 152-C | Income Tax Assessment Act 1997 Subdivision 152-D