Private ruling: Capital Gains Tax –Small Business Concession - deceased estate
Date of advice: 16 October 2017
Published: March 2018
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 July 2016

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 two year time limit to XX/XX/XXXX? | 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, passes to a beneficiary or is acquired by a surviving joint tenant ● 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 two 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 should be exercised, the Commissioner 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. Also, we do not consider 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 XX/XX/XXXX.

The advice in the Register has been edited and may not contain all the factual details relevant to each decision. Do not use the Register to predict ATO policy or decisions. | Relevant facts: The deceased passed away a few years ago. | The deceased operated a business located on a property in the country. | The deceased owned the property for over XX years. | At the date of death the deceased satisfied all the conditions under Subdivision 152A of the ITAA 1997 to access the small business concessions. | The property was listed for sale immediately after the deceased’s death. | A contract of sale for the property was entered into with a third party a few months after the expiry of the two year period. | The delay in selling the property was as a result of the remote location of the property and local economic conditions were unfavourable as a result of drought. | A capital gain was made on the sale of the property.