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This edited version has been archived due to the length of time since original publication.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: 1013071865725

Date of advice: 15 August 2016

Ruling

Subject: Capital gains tax

Question 1

Will the Commissioner exercise his discretion under subsection 152-80(3) of the Income Tax Assessment Act 1997 (ITAA 1997) and allow an extension of time to the two year period?

Answer

Yes.

This ruling applies for the following period:

Yeah ended 30 June 2010

The scheme commences on:

1 July 200X

Relevant facts and circumstances

The deceased died in 200X.

The deceased jointly owned and operated a primary production business on primary production land which is split over four titles.

The joint owner of the property passed away in 200X and as instructed by the will the land was to be utilised for the benefit of the deceased for their lifetime so that he/she could continue the primary production business.

The deceased operated the primary production business until their time of death.

The deceased's property transferred to the deceased's legal representatives being the Trustees of the deceased's estate (you).

After the deceased passed away you did not used the primary production land other than to house stock and plant until you were able to undertake an orderly sale of all livestock, plant and equipment and the properties themselves.

You advised the four properties were put on the market as soon as possible after the deceased's death. However due to a lack of movement in rural property you were unable to achieve settlement for all four properties within two years of the deceased's death. You also advised drought conditions in the area caused a delay in finding a buyer for the properties.

Settlement occurred for all four properties in 200X.

Three properties had contracts in place before the end of the two year time limit and settlement of two of these properties occurred within the two years since date of death.

The third and fourth property settled not long after.

You are considering accessing a small business capital gains tax concession which is the reason for your private ruling request for an extension of time.

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 Income Tax Assessment Act 1997 (ITAA 1997) allows either the legal personal representative of an estate or the beneficiary to apply the small business capital gains tax (CGT) concessions in respect of the sale of the deceased's asset in certain circumstances.

Specifically, the following conditions must be met:

In determining whether the discretion to allow further time would be exercised, the Commissioner has considered the following factors:

In considering whether to exercise his discretion, the Commissioner needs to be satisfied that there were circumstances beyond your control that prevented you from disposing of the assets within two years.

Application to your circumstances

In your case you have attempted to sell all four properties within two years of the deceased's death. Three out of the four properties had sale contracts in place before the two year period had expired, with settlement occurring at a later date. A lack of movement in rural properties has also caused a delay to the sale of the properties.

The Commissioner is able to apply an extension of time where there is a reasonable explanation for an extension.

The Commissioner has taken into consideration the circumstances, which were beyond your control, and will extend the time limit in paragraph 152-80(1)(d) of the ITAA 1997 to the settlement date for the two properties that did not fall within the two year exemption period.


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).