Private ruling: CGT - deceased estate
Date of advice: 25 August 2023
Published: 9 October 2023
Ruling period: Year ended 30 June 2023
Date scheme commenced: 1 July 2020

Ruling: Q1: Would Individual B have been entitled to disregard the capital gain under Division 152 of the Income Tax Assessment Act 1997 (ITAA 1997) if a CGT event had happened in relation to the Properties immediately before their death? | A1: Yes. Both Individual A and Individual B would have both been entitled to disregard the capital gain from their originally acquired interest in the Properties under the 15-year exemption in subdivision 152-B of the ITAA 1997 had the Properties been sold immediately before their death. As surviving joint tenant of Individual B's Estate, and Individual A's death occurred within 2 years of Individual B's, Individual A would have also been entitled under section 152-80 of the ITAA 1997, to disregard the gain on Individual B's interest using the 15-year exemption at the time of their death. Individual A was entitled to disregard Individual B's interest under section 152-80 of the ITAA 1997, a section that falls within Division 152. As Individual A was entitled to disregard the gain under Division 152, subject to the Commissioner providing an extension of time, the Estate is also able to utilise section 152-80 to disregard the capital gain on the interest originally acquired by Individual B. | Q2: Will the Commissioner exercise his discretion under subsection 152-80(3) of the ITAA 1997 extending the time limit to allow the small business capital gains tax concessions to be applied in relation to the sale of the properties? | A2: Yes. Having considered your circumstances and relevant factors, the Commissioner is able to exercise discretion under subsection 152-80(3) of the ITAA 1997 to allow an extension of the two-year period until 4 April 2023.

Relevant facts and circumstances: Individual A and Individual B jointly owned the CGT asset which transferred to Individual B upon Individual A's death. Individual B subsequently passed away a short time later. Individual A operated a business on the Properties between for more than 15 years as a sole trader. Due to Individual A and B both passing away within a short period of time the Estates have taken a significant amount of time to administer. A contract to dispose of the CGT asset was recently entered slightly outside the two-year time limit under paragraph 152-80(1)(d) of the ITAA 1997. Both Individual A and Individual B would have both been entitled to disregard the capital gain from their originally acquired interest in the Properties under the 15-year exemption in subdivision 152-B of the ITAA 1997 had the Properties been sold immediately before their death.

Relevant legislative provisions: Income Tax Assessment Act 1997 Division 152 | Income Tax Assessment Act 1997 Subdivision 152-A | Income Tax Assessment Act 1997 Subdivision 152-B | Income Tax Assessment Act 1997 subsection 152-80(2) | Income Tax Assessment Act 1997 subsection 152-80(3)