Private ruling: CGT - extension of the two year rule
Date of advice: 29 June 2020
Published: December 2022
Ruling period: Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: XX April 20XX

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 XX September 20XX for the sale of the Property A? | A1: Yes. Having considered your circumstances and the relevant factors, the Commissioner is able to apply the discretion under subsection 152-80(3) of the ITAA 1997 and allow an extension of time until XX September 20XX in relation to the disposal of Property A. | Q2: Will the Commissioner exercise his discretion under subsection 152-80(3) of the ITAA 1997 to extend the time limit to XX April 20XX for the sale of the Property B? | A2: Yes. Having considered your circumstances and the relevant factors, the Commissioner is able to apply the discretion under subsection 152-80(3) of the ITAA 1997 and allow an extension of time until XX April 20XX in relation to the disposal of the Property B.

Relevant facts and circumstances: In 19XX, siblings Individual A, Individual B and Individual C purchased rural property known as 'Property A' as tenants in common. On XX November 19XX, siblings Individual A, Individual B and Individual C purchased rural property known as 'Property B' as tenants in common. Both properties were utilised in the operation of a continued beef and sheep farming enterprise in the name of the three landowners. On XX June 19XX, Individual A died. Under clause X of Individual A's Will, a life interest in Individual A's interests in real estate passed to Individual C and Individual B as tenants in common in equal shares during their respective lifetimes. Individual A's one third interest in both properties were devolved to Individual A's legal representatives for the use and benefit of Individual C and Individual B as tenants in common in equal shares during their lifetime. On XX October 19XX, a formal Partnership Agreement was entered between Individual B and Individual C. They continued the sheep and livestock farming enterprise. On XX October 20XX, Individual B died. Under clause X of Individual B's Will, a life interest in Individual B's interest in real estate (including Property A and Property B) were passed to Individual C. Beef and sheep farming enterprise continued. On XX June 20XX, Individual C passed away. They were the remaining life interest party. In accordance with Individual C's Will, their one third interest in Property A and Property B would form part of the residue of their estate and under clause X was devolved to their executors to hold on trust to pay the income to their spouse during their lifetime and after their death divided equally amongst their children. The executors of Individual C continued to operate the sheep and cattle livestock farming enterprise on the properties until such time livestock were disposed off and properties subsequently sold. On XX April 20XX, a contract was entered into for the sale of Property B. On XX September 20XX, a contract was entered into for the sale of Property A. The properties were not disposed off within the two year period, as the Will of both Individual A, and then Individual B directed that the life interest of use of the properties in question be given to their surviving siblings for their use during their lifetime. Title ownership of the properties transferred and remained in the names of the legal representatives of both Individual A and Individual B until final disposal. The two properties were unable to be sold off until the remaining life interest holder (Individual C) passed away on XX June 20XX. Both properties were subsequently sold within 15 months of Individual C's death. Your tax agent has advised that at the date of death of each of Individual A, Individual B and Individual C, they satisfied conditions under subdivision 152A of the ITAA 1997 to access all or part of the small business concessions in relation to the small business 15 year exemption and the small business retirement exemption. As such, they would have been able to apply small business concessions themselves if they had disposed off the asset immediately before their death.

Relevant legislative provisions: Subdivision 152A of the Income Tax Assessment Act 1997 Subsection 152-80(3) of the Income Tax Assessment Act 1997