Private ruling: CGT - deceased estate
Published: November 2013
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

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

Relevant facts and circumstances: The deceased passed away during the 2010-11 financial year. Probate was granted at which time the estate began the process of realising the assets of the estate. The main assets of the estate included commercial properties. The deceased operated a business from these properties from the date of their respective acquisitions up to the date of their death. The deceased met the conditions for the small business concessions just prior to their death. The commercial properties were placed on the market with an agent. The properties received no offers over a period of time and the agent was discharged. A new agent was appointed. An offer was received on the properties. This offer was accepted by contract during the 2013-14 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 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 a reasonable explanation for the delay in the disposal of the commercial properties has been provided. Unfavourable market conditions impacted the sale of the properties. We consider that continuing efforts were made to dispose of the properties. We do not consider that allowing this request would cause the unsettling of others or that there is any mischief involved. Accordingly, the Commissioner will exercise his discretion under subsection 152-80(3) of the ITAA 1997 to extend the time period .