Private ruling: CGT - small business concessions
Date of advice: 17 December 2025
Published: 2 February 2026
Ruling period: 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 (ITAA 1997) to extend the 2-year time limit in paragraph 152-80(1)(d) of the ITAA 1997? | A1: Yes. Having considered all relevant factors, the Commissioner will exercise discretion under subsection 152-80(3) of the ITAA 1997 to extend the time limit until a specified date for disposal of the Properties.

Relevant facts and circumstances: You and your spouse acquired two adjoining rural properties as joint tenants. The properties are used for farming. Your spouse managed the operational aspects, while you provided support as needed and handled the financial matters. The business activity is operated by Trust A. You and your spouse were the directors of the corporate trustee. You acquired your spouse's interest in the Properties after he passed away. You and your child are now the directors of the corporate trustee after your spouse's death. Your child his partner took over the day-to-day management and operations of the farm. Since they became involved in the business operation, your involvement has significantly decreased, however, you continue to participate regularly in strategic discussions and decision-making. You plan to retire and dispose of the interest in the properties that you acquired from your late spouse to your child by way of a gift or through a vendor-finance arrangement so that your child can work on the farm permanently. The following events contributed to the delay in your decision to dispose of the properties: • COVID-19 pandemic triggered prolonged lockdowns that restricted interstate family meetings and decision-making. • The farm has faced severe financial hardship after a decade of drought and two hailstorms that destroyed fruit crops, leaving significant debt. The family needed time to grieve and review the farm's financial position and long-term viability. This included participating in a state-funded farming business assistance program. • Your youngest child had serious health issues that required you to devote considerable time and effort to support your child and their children. This includes extended stays in distant towns, hospital care and ongoing assistance. At your bank's request, you had the properties valued to give your family some comfort that there is sufficient equity in the properties to ensure the ongoing business case and viability of the farming enterprise. You expect to dispose of the said interest in the properties by a specified date.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 108-7 | Income Tax Assessment Act 1997 section 128-50 | Income Tax Assessment Act 1997 subsection 128-50(3) | Income Tax Assessment Act 1997 section 152-80 | Income Tax Assessment Act 1997 subsection 152-80(1) | Income Tax Assessment Act 1997 subsection 152-80(3)

Reasons for decision: Summary: Section 128-50 of the ITAA 1997 provides if a CGT asset is owed by joint tenants and one of them dies, the survivor is taken to have acquired the individuals interest in the asset on the day that the individual dies. Subsection 128-50(3) of the ITAA 1997) states that if the individual who died acquired his or her interest in the asset on or after 20 September 1985, the first element of the cost base or reduced cost base of the deceased's interest is divided between the survivors equally. You and your spouse purchased the properties as joint tenants. Section 108-7 of the ITAA 1997 applies so that you were both treated as if you each owned a separate asset, being an equal interest in the Properties. When your spouse died, section 128-50 of the ITAA applied so that you were taken to have acquired his share of the properties on the day of death. Consequently, your ownership of the properties consists of two separate interests: the first was acquired on the dates the properties were originally purchased, and the second was acquired upon your spouse's death. Section 152-80 of the ITAA 1997 allows either the legal personal representative of an estate or the beneficiary to apply the small business capital gains tax (CGT) concessions in respect of the sale of the deceased's asset in certain circumstances. Subsection 152-80(1) provides the following conditions must be met: • The CGT asset forms part of the estate of a deceased individual or was owned by joint tenants and one of them dies; • the asset devolves to the legal personal representative, or passes to a beneficiary or an interest in the asset is acquired by the surviving joint tenant or tenants; • the deceased would have been able to apply the small business concessions themselves immediately prior to their death, and • a CGT event happens within 2 years of the deceased's death. The Commissioner has the discretion to extend the 2-year time limit under subsection 152-80(3) of the ITAA 1997. In determining whether to allow a longer period, the Commissioner will consider a range of factors such as: • whether there is evidence of an acceptable explanation for the period of extension requested and whether it would be fair and equitable in the circumstances to grant the extension; • whether it would be prejudicial to the Commissioner to grant further time. The absence of prejudice is not enough to justify the granting of the extension; • whether the decision will unsettle people other than the Commissioner or unsettle established practices; • whether it is fair to people in similar positions and the wider public interest; • whether there is any mischief involved; and • the consequences of granting the extension. In considering whether to exercise this discretion, the Commissioner needs to be satisfied that there were circumstances beyond your control that prevented the applicant from disposing of the assets within two years. | Detailed Reasoning - Application to your circumstance: You and your spouse owned the properties as joint tenants. When your spouse passed away you acquired his interest in the properties. You would be able to apply the small business CGT concessions in the same way as the deceased would have been entitled to if a CGT event happens within two years of your spouse's death. The delay in finalising the decision to transfer the interest in the properties that you acquired after your spouse's death was influenced by several factors including the COVID-19 pandemic which triggered Government-imposed lockdowns. Family circumstances such as your child's serious health issues which required spending most of your time attending to and providing support also contributed to the delay. Having considered relevant factors, the Commissioner will exercise discretion under subsection 152-80(3) of the ITAA 1997 and allow an extension to the two-year time limit until a specified date within which to dispose the interest acquired from your late spouse to your child. | Detailed Reasoning - Additional information: The Commissioner has not considered your eligibility for the small business CGT concessions. You should ensure that you satisfy the basic conditions. Further information on 'small business CGT concessions' can be found on our website by searching QC 22655.