| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your written advice
Authorisation Number: 1013022947141
Date of advice: 24 May 2016
Ruling
Subject: Capital gains tax - small business concession - extension of time
Question:
Will the Commissioner exercise his discretion under subsection 152-80(3) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the 2 year time limit to XX/XX/XXXX?
Answer:
Yes
This ruling applies for the following period:
Year ended 30 June 2015
The scheme commenced on:
1 July 2014
Relevant facts
You and your spouse formed a partnership.
You and your spouse purchased a property.
The partnership used the property to carry on its business activities.
Your spouse passed away a few years ago.
You continued to operate the partnership's business activity.
The partnership's business activity ceased as a result of you suffering an illness.
Your spouse's 50% interest in the property was an active asset for more than 71/2 years during the period of ownership.
The property was sold on XX/XX/XXXX.
The delay in selling the property was as a result of your illness and the need to undertake structural repairs to the property.
Your previous tax advisor did not provide you with the correct information as to the operation of the two year time limit to access the CGT Small Business Concessions following the death of your spouse.
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, passes to a beneficiary or is acquired by a surviving joint tenant
• 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 should be exercised, the Commissioner 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 asset. Also, we do not consider allowing this request would cause the unsettling of others.
Accordingly, the Commissioner will exercise his discretion under subsection 152-80(3) of the ITAA 1997 to extend the time period to XX/XX/XXXX.
Additional information
In your private ruling request you have indicated that you may qualify for the small business CGT concessions. The Commissioner has not considered your eligibility for the small business CGT concessions in this ruling. You should ensure that you satisfy the basic conditions and any other relevant conditions. More information on Capital gains tax concessions for small business 2015 is available on our website at www.ato.gov.au.
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
