Private ruling: Small business concessions - deceased estate - extension of time
Date of advice: 23 July 2020
Published: September 2020
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion under subsection 152-80(3) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the time limit under subsection 152-80(1)(d) of the ITAA 1997 in relation to the sale of the land? | A1: Yes. Having considered your circumstances and the relevant facts, the Commissioner will exercise the discretion under subsection 152-80(3) of the ITAA 1997 and allow an extension of time. Note: We have limited our ruling to the question raised in your application being whether an extension of time will be granted. You advised that the deceased would have been entitled to the small business CGT concessions immediately before they passed away. The private ruling on whether an extension of time will be granted was issued on this basis, that is, the Commissioner did not consider whether the deceased was in fact entitled to the small business CGT concessions. More information about the concessions can be found by searching 'QC 22165' on ato.gov.au

Relevant facts and circumstances: Person A owned post-CGT land which was used by a related entity to conduct a farming business. After Person A fell ill, the related entity ceased business operations. Person A entered into a lease agreement whereby the land was leased to unrelated third parties for a X-year period. The lease contained a restriction that Person A could not sell the land during the term of the lease except to the third parties. While the lease was still ongoing, Person A passed away. There was a delay in the granting of probate due to issues that were not caused by the executor. After probate was granted, their executor received legal advice that they could not sell the property on the open market due to the restrictions in the lease. The executor entered into an agreement with the third parties to sell them the land. The executor intends to apply the small business 15-year exemption to the sale of the land to the extent that Person A was eligible to.

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