Private ruling: CGT - CGT event happens to an asset or interest within 2 years of an individual's death
Date of advice: 17 September 2025
Published: 17 November 2025
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner allow the Taxpayer an extension of time pursuant to section 152-80(3) of the Income Tax Assessment Act 1997 (ITAA1997) until November 20XX in relation to the one third interest in the property inherited from Person C's estate? | A1: Yes | Q2: Does the Commissioner accept that section 152-80 of the ITAA 1997 can apply to the one sixth interest in the property (acquired before 20 September 1985) inherited from the Person B's estate? | A2: No | Q3: Does the Commissioner accept that section 152-80 of the ITAA 1997 can apply to the one sixth interest in the property inherited from the Person C's estate? | A3: No

Relevant facts and circumstances: Your family were farmers. The farmland was acquired in 19XX by Person A. On Person's A's death the farmland was transferred to his son, Person B, who became the registered proprietor. Person B continued the primary production activities on the farmland. You had a car accident which left you with a disability. In 1994 you and Person C both received one third interest in the farmland. You, Person B and Person C owned the farmland as joint tenants. The farmland was used in a partnership business for approximately 12 years. You then left the farm to go and live with your sister and Person C left the farm to go into aged care. In 20XX a written lease was executed with a tenant to lease the land for 5 years until 30 June 20XX as well as the tenant having a first right of refusal if the farmland was sold. In 20XX Person B died. You and Person C each inherited a half share of Person B's one-third interest in the farmland, pursuant to the laws of joint survivorship. In 20XX Person C died. The net value of Person C's assets just before their death was below $X and they had no entities connected or affiliated with them. Had Person C sold their one-third interest in the farmland just before their death, they would have satisfied the basic conditions for the application of the small business CGT concessions. Following Person C's death, you became the sole owner of the farmland. The farmland was valued at $X at Person's B's death. Sale of the farmland was delayed by various factors outside the control of both yours and The Public Trustee's control, including: - Following the death of Person B and Person C, the ongoing care of you was a priority. - Once the Public Trustee was appointed it took the Public Trustee time to investigate your case and assets. - There were also delays by dealing with your surviving family. - The Public Trustee was also dealing with significant back log due to the COVID-19 pandemic. - Farmland was subject to the lease until 20XX. - Once the decision was made to sell the farmland the sale process with the Public Trustee office is complex which includes market appraisal, separate valuation, obtaining sibling views, SACAT approval, Victorian Civil and Administrative Tribunal approval, Crown Solicitor approval and Public Trustee approval. In 20XX a contract was executed to sell the farmland for a price of $X.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 104-10(5) | Income Tax Assessment Act 1997 section 152-10 | Income Tax Assessment Act 1997 section 152-80

Reasons for decision: Summary: Section 152-80 of the ITAA 1997 allows the surviving joint tenant of a deceased individual to apply the small business CGT concessions in respect of the sale of the deceased's CGT assets where the following are satisfied: • the CGT asset was owned by joint tenants and one of them dies; and • an interest in the asset is acquired by the surviving joint tenant or tenants • the deceased would have been entitled to reduce or disregard a capital gain under Division 152 of the ITAA 1997 if a CGT event had happened in relation to the CGT asset immediately before his or her death; and • a CGT event happens in relation to the CGT asset within two years of the individual's death. Application to your circumstances | Detailed Reasoning - The CGT asset was owned by joint tenants and one of them dies:: The deceased and yourself owned one-third interest in the farmland as joint tenants. An interest in the asset is acquired by the surviving joint tenant or tenants : You acquired the farmland as the surviving joint tenant after the passing of Person B in 20XX. The deceased would have been entitled to reduce or disregard a capital gain under Division 152 if a CGT event had happened in relation to the CGT asset immediately before their death: Section 152-10 of the ITAA 1997 explains the basic conditions for relief: • a CGT event happens in relation to a CGT asset of yours in an income year • the event would have resulted in the gain • you satisfy the maximum net asset value test • the CGT asset satisfies the active asset test | Detailed Reasoning - Maximum net asset value test: Section 152-15 states you satisfy the maximum net asset value test if, just before the CGT event, the sum of the following amounts does not exceed $X: • The net value of the CGT assets of yours • The net value of the CGT assets of any entities connected with you • The net value of the CGT assets of any affiliates of yours or entities connected with your affiliates The farmland was valued at $X at the date of Person B's death. It is accepted that the value of the farmland would remain approximately the same 4 months later at Person C's death. | Detailed Reasoning - Active asset test: Section 152-35 of the ITAA 1997 outlines the active assets test: A CGT asset satisfies the active asset test if: (a) you have owned the asset for 15 years or less and the asset was an active asset of yours for a total of at least half of the period specified in subsection (2); or (b) you have owned the asset for more than 15 years and the asset was an active asset of yours for a total of at least 7.5 years during the period specified in subsection (2). Subsection 152-35(2) of the ITAA 1997 outlines that the period: (a) begins when you acquired the asset; and (b) ends at the earlier of: (i) the CGT event; and (ii) if the relevant business ceased to be carried on in the 12 months before that time or any longer period that the Commissioner allows - the cessation of the business. Had Person C sold their one-third interest in the farmland just before their death, they would have satisfied the basic conditions for the application of the small business CGT concessions. | Detailed Reasoning - A CGT event happens in relation to the CGT asset within two years of the individual's death: A CGT event A1 happened when the Public Trustee as administrator for you executed a contract to see the farmland. Person C's date of death was 20XX. The sale of the interest was more than 2 years after Person C's death. Accordingly, this condition is not satisfied. Subsection 152-80(3), however, provides that the Commissioner may extend the time limit in paragraph 152-80(1)(d). In determining whether the 2-year time limit will be extended, the Commissioner considers 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 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 your case, the reason for the delay in selling the property after Person C's death was the ongoing care of you was a priority, the Public Trustee was appointed who was dealing with Covid 19 back log, dealing with your surviving family, the farmland being leased until 20XX and once the decision was made to sell the farmland there was complexity with all the approvals. In the circumstances, the period of the extension you have requested is considered fair and reasonable and the Commissioner will exercise the discretion under subsection 152-80(3) to extend the time limit in paragraph 152-80(1)(d) to 21 November 20XX. As a consequence, the condition in paragraph 152-80(1)(d) is met. | Detailed Reasoning - Question 2: As identified in question 1, section 152-80 of the ITAA 1997 applies to the disposal of a CGT asset if the deceased would have been entitled to reduce or disregard a capital gain under Division 152 had a CGT event occurred in relation to the asset immediately before their death. One of the conditions is that the CGT event would have resulted in a gain (subsection 152-10(b) of the ITAA 1997). However, subsection 104-10(5) of the ITAA 1997 says a capital gain or capital loss you make is disregarded if you acquired the asset before 20 September 1985. Application to your circumstances Person B acquired their interest pre-CGT. At Person B's death, you acquired a one-sixth interest in the farmland. In applying 152-80 of the ITAA 1997, Person B was not entitled to reduce or disregard a capital gain under Division 152 of the ITAA 1997 immediately before their death. This is because his interest in the farmland was acquired pre-CGT and if Person B had disposed of it just prior to their death any capital gain would have been disregarded. | Detailed Reasoning - Question 3: Section 152-80 allows the surviving joint tenant of a deceased individual to apply the small business CGT concessions in respect of the sale of the deceased's CGT assets where the following are satisfied: • the CGT asset was owned by joint tenants and one of them dies; and • an interest in the asset is acquired by the surviving joint tenant or tenants • the deceased would have been entitled to reduce or disregard a capital gain under Division 152 if a CGT event had happened in relation to the CGT asset immediately before his or her death; and • a CGT event happens in relation to the CGT asset within two years of the individual's death. Application to your circumstances | Detailed Reasoning - The CGT asset was owned by joint tenants and one of them dies:: The deceased and yourself owned the farmland as joint tenants. | Detailed Reasoning - An interest in the asset is acquired by the surviving joint tenant or tenants:: You acquired the farmland as the surviving joint tenant after the passing of Person C. The deceased would have been entitled to reduce or disregard a capital gain under Division 152 if a CGT event had happened in relation to the CGT asset immediately before their death: In applying 152-80 of the ITAA 1997, you must meet all the basic conditions for relief under section 152-10 of the ITAA 1997. Section 152-10 of the ITAA 1997 explains the basic conditions for relief: • a CGT event happens in relation to a CGT asset of yours in an income year • the event would have resulted in the gain • you satisfy the maximum net asset value test • the CGT asset satisfies the active asset test. | Detailed Reasoning - Maximum net asset value test: Section 152-15 states you satisfy the maximum net asset value test if, just before the CGT event, the sum of the following amounts does not exceed $X: • The net value of the CGT assets of yours • The net value of the CGT assets of any entities connected with you • The net value of the CGT assets of any affiliates of yours or entities connected with your affiliates. The farmland was valued at $X on the date of Person B's death. It is accepted that the value of the farmland would remain approximately the same 4 months later at Person C's death. | Detailed Reasoning - Active asset test: Section 152-35 of the ITAA 1997 outlines the active assets test: A CGT asset satisfies the active asset test if: (a) you have owned the asset for 15 years or less and the asset was an active asset of yours for a total of at least half of the period specified in subsection (2); or (b) you have owned the asset for more than 15 years and the asset was an active asset of yours for a total of at least 7.5 years during the period specified in subsection (2). Subsection 152-35(2) of the ITAA 1997 outlines that the period: (a) begins when you acquired the asset; and (b) ends at the earlier of: (i) the CGT event; and (ii) if the relevant business ceased to be carried on in the 12 months before that time or any longer period that the Commissioner allows - the cessation of the business. Person C inherited Person B's interest in the farmland at the date of Person B's death. At the time of the inheritance, 500 acres of the farmland was subject to a lease agreement that continued until 20XX. Prior to Person B's death they actively farmed the land. However, following the inheritance, both Person C and yourself resided away from the farm and did not engage in farming activities. Given that the asset was acquired by Person C and held for approximately four months, and considering it was not actively used in a business during that period, the asset does not satisfy the active asset test. Not meeting the active asset test means Person C did not meet all the basic conditions for relief. Person C was not entitled to reduce or disregard a capital gain under Division 152 of the ITAA 1997 immediately before their death.