Private ruling: Deceased estate - small business concession - extension of time
Date of advice: 26 October 2016
Published: December 2016
Ruling period: Year ending 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 allow the small business capital gains tax (CGT) concessions to be applied? | A1: Yes.


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 a reasonable explanation for the delay in the disposal of the farming property has been provided. We consider that continuing efforts were made to dispose of the property. We do not consider that allowing this request would cause the unsettling of others or that there is any mischief involved. Accordingly, the Commissioner will exercise his discretion under subsection 152-80(3) of the ITAA 1997 to extend the time requested .

Relevant facts: The deceased passed away in 2012. (The deceased) | The deceased acquired an interest in lot X in 1997 (Lot X) | The deceased conducted a primary production business on lot X for a period of 15 years. | Lot X was used as part of a partnership. | Lot X was an asset of the estate. | If the deceased had disposed of the property immediately prior to their death, they would have been eligible to claim the small business CGT concessions in relation to the farming property. | The executor of the estate obtained probate in 2013. | Lot X was listed for sale in 2013. | There were two contracts for the sale of lot X, both of which did not proceed in 2013 and 2015. | Lot X was eventually sold under a contract in 2015 and a capital gain will result from the sale.