Private ruling: Small business capital gains tax concessions
Date of advice: 19 December 2018
Published: April 2019
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 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 allow the small business capital gains tax (CGT) concessions to be applied? | A1: Yes. In certain circumstances section 152-80 of the ITAA 1997 allows either the trustee or a beneficiary of the trust to apply the small business CGT concessions in respect of the sale of the deceased’s CGT assets if a CGT event happens to the asset within two years of the death. The Commissioner can extend the time period in accordance with subsection 152-80(3) of the ITAA 1997. Having considered your circumstances and the relevant factors, the Commissioner will allow an extension of time to 5 October 2018 to allow the small business CGT concessions to be applied in relation to the capital gain made on the sale of your interest in the property acquired on your father’s passing.

Relevant facts and circumstances: The deceased operated a small business entity in partnership. The deceased acquired their initial share of the property the business was operated on after 20 September 1985. The deceased subsequently acquired the remaining ownership interest in the property when their spouse passed away. The property was an active asset of the partnership. You inherited the property as equal shares tenant in common under the deceased’s will. There was a long term lease on the property. The lease was below market value. Your lawyer advised you that the lease could not be challenged. Probate of the deceased’s estate was granted a number of months after the deceased’s death. Initially there were a number of executors of the estate. One removed themselves as an executor and another passed away during the administration of the estate. Around the time the estate was fully administered you also found out you had health problems. You had initial negotiations with the tenant in common shortly after the deceased’s death and agreed that they would purchase the property from you and agreed on a price. This did not eventuate at the time. Sometime later, the tenant in common made a formal offer to purchase your share of the property and noted that they may attempt to enforce the sale using their rights as a joint owner. Some months later the sale contract was exchanged and the property settled.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 152-80 | Income Tax Assessment Act 1997 Subsection 152-80(3) Further issues for you to consider | We have limited our ruling to the question raised in your application. This ruling has not fully considered your eligibility for the small business CGT concessions. You should ensure that you satisfy the relevant conditions for the concessions. More information is available in the publication Capital gains tax concessions for small business , which is available on our website www.ato.gov.au.