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Edited version of your private ruling
Authorisation Number: 1012499457460
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 capital gains tax (CGT) concessions to be applied?
Answer
Yes
This ruling applies for the following period:
Year ending 30 June 2014
The scheme commenced on:
1 July 2013
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
The deceased conducted a business on a property for a period of years.
The property became an asset of the estate.
If the deceased had disposed of the property immediately prior to their death, they would have been eligible to claim the small business CGT concessions in relation to the property.
A claim against the will of the deceased prevented probate from being granted.
The executor of the estate obtained an administration order from the Supreme Court to enable the administration of the estate to proceed.
The property was subsequently listed for sale.
There were several contracts for the sale of the property that did not proceed.
Additionally multiple separate auctions were held for the property and the sale price was reduced.
The property was eventually sold under a contract during the 2013-14 financial year and a capital gain will result from this sale.
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 a reasonable explanation for the delay in the disposal of the property has been provided. Delays in the administration of the estate impacted the sale of the property. Additionally we consider that continuing efforts were made to dispose of the property. 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.
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