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This edited version has been archived due to the length of time since original publication.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

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Edited version of your written advice

Authorisation Number: 1051360954404

Date of advice: 17 April 2018

Ruling

Subject: Small business concessionsextension of time

Question

Will the Commissioner exercise the discretion in subsection 152-80(3) of the Income Tax Assessment Act 1997 (ITAA 1997) and extend the time limit to enable you to apply the active asset reduction and small business retirement exemption to disregard the capital gain made on the disposal of the 50% share in the property you inherited from the deceased?

Answer

Yes.

This ruling applies for the following period

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You and another person purchased a property as joint proprietors from which you and the other person carried on a business.

The other person passed away more than 2 years before you sold the property.

When you sold the business the purchaser entered into a lease agreement for the property which included an option to purchase.

The purchaser of the business decided not to exercise the option to purchase the property and vacated the property having found a new tenant to take over the lease.

The property was sold to the new tenant.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subdivision 152-C

Income Tax Assessment Act 1997 Subdivision 152-D

Income Tax Assessment Act 1997 section 152-80

Income Tax Assessment Act 1997 subsection 152-80(1)

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 a beneficiary to apply the small business CGT concessions in respect of the sale of the deceased’s asset in certain circumstances.

These conditions, as set out in subsection 152-80(1) of the ITAA 1997, are:

The Commissioner may extend the time limit (subsection 152-80(3) of the ITAA 1997).

In your case, as the disposal of the property did not occur within 2 years of the deceased’s death you will only be able to disregard the capital gain if the Commissioner extends the 2 year time limit for you to dispose of the 50% share in the property you inherited from the deceased.

In determining whether to allow an extended time limit the Commissioner considers the following factors:

Having considered the relevant factors above, and the particular circumstances of your case, the Commissioner will apply the discretion in subsection 152-80(3) of the ITAA 1997 and extend the time limit.


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