Private ruling: Deceased estate - small business concessions
Published: April 2013
Ruling period: Year ending 30 June 2012
Date scheme commenced: 1 July 2011

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 allow the small business capital gains tax (CGT) retirement exemption to be applied? | A1: Yes

Relevant facts and circumstances: Prior to their death, the deceased held an interest in a partnership which they had acquired progressively over a period of time. The deceased died on during the 200X financial year and their partnership interests devolved to their estate. The partnership ran a business. Following the deceased's death, the remaining partners proceeded to sell the business. The business was put on the market. The business was located in a small town with a small population. Negotiations were entered into with a prospective purchaser during the relevant financial year; however this sale fell through prior to a contract being prepared. You entered into negotiations with a second prospective buyer; however this sale also fell through. After further marketing and negotiations, the business was sold in the subsequent financial year.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 152-80 | Income Tax Assessment Act 1997 Subsection 152-80(3)

Reasons for decision: Summary: Section 152-80 of the 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. Several unsuccessful negotiations and unfavourable market conditions impacted the sale of the partnership business. 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 .