Private ruling: CGT – SBC – deceased estate – extension of time
Date of advice: 24 April 2018
Published: July 2018
Ruling period: Year ending 30 June 2018
Date scheme commenced: 1 July 2017

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 enable the small business capital gains tax (CGT) concessions to be applied? | A1: Yes

Relevant facts and circumstances: The deceased owned land which was used in their business. The land has been in the deceased’s family for many generations. The land was leased a few months before the deceased passed away. The land was disposed of outside of the two year period. The deceased would have satisfied the basic conditions for the small business CGT concessions just before their death.

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

Reasons for decision: Summary: Section 152-80 of the Income Tax Assessment Act 1997 (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 if certain conditions are satisfied. These conditions, as set out in subsection 152-80(1) of the ITAA 1997, are: (a) the CGT asset forms part of the estate of a deceased individual, or was owned by joint tenants and one of them dies (b) the asset devolves to the individual’s legal personal representative, passes to a beneficiary of the individual or an interest in the asset is acquired by the surviving joint tenant or tenants (as the case may be) (c) the deceased individual would have been entitled to disregard a capital gain if a CGT event had happened in relation to the CGT asset immediately before their death, and (d) a CGT event happens in relation to the CGT asset within 2 years of the individual’s death. The Commissioner may extend the time limit (subsection 152-80(3) of the ITAA 1997). In determining whether to exercise the discretion to extend the time limit set out in paragraph 152-80(1)(d) of the ITAA 1997, the Commissioner has considered the following factors: ● whether there is evidence of an acceptable explanation for the period of extension requested and whether it would be fair and equitable in the circumstances to provide such an extension, ● whether there is any prejudice to the Commissioner if the additional time is allowed, however the mere absence of prejudice is not enough to justify the granting of an extension, ● whether there is any unsettling of people, or of established practices, ● fairness to people in like positions and the wider public interest, ● whether there is any mischief involved, and ● the consequences of the decision. Having considered the circumstances of this particular case and the factors outlined above, the Commissioner is able to apply his discretion to extend the time limit in paragraph 152-80(1)(d) of the ITAA 1997 .