Private ruling: CGT - deceased estate, extension of time
Published: May 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

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 year ended 30 June 2013 to allow the small business capital gains tax (CGT) concessions to be applied? | A1: Yes

Relevant facts and circumstances: The deceased died in year ended 30 June 20XX. The CGT assets (the property) include units and shares in various entities. Following the deceased's death, the property became part of the deceased estate. The main assets involved in the property were assets relating to tenements and certain rights attached to those tenements. There were ongoing disputes and pending litigation in relation to the tenements at the time of, and following, the deceased's death. These disputes included a matter heard in Court in relation to the ability of the estate and other parties to dispose of assets relating to the operations, including hearings throughout 20XX, which continued until year ended 30 June 20YY. The deceased estate made various efforts to settle and resolve the disputes. In year ended 30 June 20ZZ, the disputes were resolved. In year ended 30 June 20ZZ, prospective purchasers of the property were procured. However, the sale did not proceed because of the purchasers' inability to obtain finance. Alternative purchasers were found, and the property became subject to a Contract for Sale dated year ended 30 June 20ZZ.

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 in certain circumstances. Specifically, the following conditions must be met: the asset devolves to the legal personal representative or passes to a beneficiary 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 2 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 would be exercised, the Commissioner has 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. Multiple disputes, including a legal dispute heard in Court until year ended 30 June 2012 prevented the sale of the property. Considering the timeframe involved, we do not consider that 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 year ended 30 June 2013 .