Private ruling: CGT
Published: December 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 allow the small business concessions to be applied to the portion of the property that was acquired by you as a surviving joint tenant? | A1: No

Relevant facts and circumstances: You and your late spouse acquired a property as joint tenants. Had your spouse disposed of their interest in the property immediately prior to their death they would have been entitled to apply the small business concessions to any capital gain. As the surviving joint tenant, you became the sole owner of the property following your spouse's death. You continued to live in the dwelling and receive rental income from the land. You had intended to sell the property soon after your spouse's passing; however it took you some time to be able to arrange your affairs. Additionally, the real estate market at the time of your spouse's death was depressed. The property was placed on the market at a point in time when you felt the market had improved enough. The property was sold in the 2012-13 financial year.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 152-80 | Income Tax Assessment Act 1997 Subsection 152-80(3)

Reasons for decision: Summary: Section 152-80 of the 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, passes to a beneficiary or is acquired by a surviving joint tenant · 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, while we appreciate the emotional distress you suffered we do not consider that you have provided a reasonable explanation for the delay in the disposal of the CGT asset. Regardless of the depressed state of the real estate market, the property was not listed for sale until more than two years after your spouse's death. We do not consider that you made continuing efforts to dispose of the property. An extension would not be granted to other taxpayers in similar circumstances. Accordingly, the Commissioner will not exercise his discretion under subsection 152-80(3) of the ITAA 1997 to extend the time period .

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