Private ruling: Capital gains tax - small business concessions - extension of time
Date of advice: 11 May 2018
Published: July 2018
Ruling period: Year ending 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 to allow the small business capital gains tax (CGT) concessions to be applied? | A1: No.


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 there is not an acceptable explanation for the significant delay in the disposal of the property. We consider that continuing efforts were not made to dispose of the property, including not listing the property for sale earlier and undertaking the auction sooner. We consider that allowing this request would cause the unsettling of others who are in a similar situation. We do not however consider that there is any mischief involved, it is that the period of time is lengthy and there is not a sufficient explanation of what attempts have made to dispose of the property. Accordingly, the Commissioner will not exercise his discretion under subsection 152-80(3) of the ITAA 1997 to extend the time period to 20 April 201X .

Relevant facts: The deceased passed away in 201Y. (The deceased) | You and the deceased acquired various parcel of land at various times that make up a farming property known as ‘A’.(The property). | The property is xxx hectares in size and various parcels were acquired prior to 20 September 1985 and some after 20 September 1985. | The relevant parcels acquired after 20 September 1985 are known as ‘B’ and ‘C’. | The deceased conducted a primary production business on the land until their passing. | The primary production business was animal breeding. | The deceased was over 55 at the time of their death. | The livestock have been progressively sold in the intervening period. | If the deceased had disposed of ‘B’ and ‘C’ immediately prior to their death, they would have been eligible to claim the small business CGT concessions in relation to the land. | You experienced a significant amount of grief at the passing of the deceased and found it difficult to decide what to do with the assets of the deceased. | The majority of the deceased’s farming land passed to you under the terms of the deceased’s will and this includes ‘B’ and ‘C’. | You and the deceased have xxx children and you considered whether they were able to carry on the farming business of the deceased. | You decided that this was not practical and the property should be marketed and sold. | The property was placed on the market in 201X. | You received some interest from an overseas investor, however this proved unsuccessful. The overseas investor undertook some inspections of the property and obtained a valuation of the property. | You indicated to the investor that you were interested in selling the property for $xxx | Your initial asking price was more than the valuation report obtained by the investors. | The overseas investor did not make an offer after their last meeting with you in 201X. | The local area has experienced some dry periods in the latter part of 201X which has made the property less desirable to potential purchasers. | The property received some recent rainfall and you have now decided to list the property for sale by auction. | The auction took place in 201X and you accepted an offer of $xxx for the property.