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Edited version of your private ruling
Authorisation Number: 1012611794979
Ruling
Subject: Commissioners Discretion
Question
Will the Commissioner exercise his discretion under subsection 152-80(3) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend your time limit to access the capital gains tax (CGT) concession for small business, on the disposal of the property?
Answer
Yes
This ruling applies for the following period(s)
Income year ended 30 June 2013
Income year ended 30 June 2014
The scheme commences on
The scheme has commenced
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.
You are the executor for the estate of your deceased family member.
The deceased operated a business on the property.
The deceased passed away in late 20XX.
Under the will of the deceased, X% of their property passed to one of the family members of the deceased with the remainder to pass to you the executor of the will.
Now, that the property has been sold you are able to wind up the estate and have requested an extension of time to access the small business concessions.
You have provided the following explanation for the delay in disposing of the property:
• Although not formally challenged in court there was a dispute over the will between the executor of the will and another family member who has custody of the main beneficiary of the will. The other family member expressed a desire to move into the property while you intended to dispose of the property and transfer the proceeds as per the will.
• The delay between the deceased death and listing the property was largely to see whether a formal legal challenge of the will would eventuate.
The property was first listed in early 20XX but due to the nature of the property you were unable to find a buyer. You further reduced the price and were eventually able to sell the property X years after the deceased death.
Relevant legislative provisions
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
• 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
• consequences of the decision.
In this situation we consider that although the will was not overly complex or formally challenged in the courts we consider that your explanation as to dispute between the executor and the other family member cause the delay of the sale of the property to be reasonable.
Further your actions in advertising the property for X months during the X year period amounted to a reasonable attempt to sell the property. We consider the delay in selling the property was largely out of your hands and due to the nature of the property and the limited availability of buyers.
There is no prejudice to the commissioner or other taxpayers, nor mischief or serious consequences, therefore the Commissioner will exercise the discretion and extend the period for you to access the small business concession by two years.
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