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Edited version of your private ruling
Authorisation Number: 1012457729472
Ruling
Subject: Deceased estate - small business concessions
Question
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 15 year exemption to be applied to your share of the properties that produced a capital gain?
Answer
Yes.
This ruling applies for the following period:
Year ending 30 June 2013
The scheme commenced on:
1 July 2012
Relevant facts and circumstances
You were a beneficiary of the deceased's estate.
The deceased's estate included a number of properties.
The deceased met the conditions for the small business concessions in relation to the properties immediately prior to their death.
There were delays in the transfer of the titles of the properties into the names of the beneficiaries which delayed your ability (along with the other beneficiaries) to dispose of the property.
During the administration process of the estate, each beneficiary individually made various email and phone enquiries to check on progress with the trustee, often with unsatisfactory results.
You and the other beneficiaries listed the properties for sale promptly following the title transfer.
No offers on the properties were rejected; however, the market conditions were unfavourable.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 152-80
Income Tax Assessment Act 1997 Subsection 152-80(3)
Reasons for decision
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 you have provided a reasonable explanation for the delay in the disposal of the CGT assets. Delays in the administration of the estate and unfavourable market conditions impacted the sale of the properties. We do not consider that allowing this request would cause the unsettling of others or that there is any mischief involved. All of the properties were sold under contract within X years of title being transferred to you as a beneficiary.
Accordingly, the Commissioner will exercise his discretion under subsection 152-80(3) of the ITAA 1997 to extend the time period.
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