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Edited version of your written advice
Authorisation Number: 1051468038561
Date of advice: 19 December 2018
Ruling
Subject: Capital gains tax
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 XX/XX/20XX to allow the small business capital gains tax (CGT) 15 year exemption to be applied in relation to the capital gain resulting from the disposal of the property?
Answer
Yes.
Where a deceased’s asset passes to a beneficiary of a testamentary trust and the deceased would have been able to apply the small business CGT concessions themselves if they had disposed of the asset immediately prior to their death, section 152-80 of the ITAA 1997 allows the beneficiary to apply the concessions in respect of their disposal of the asset if their disposal happens within two years of the death. The Commissioner can extend the time period in accordance with subsection 152-80(3) of the ITAA 1997.
After considering your circumstances the Commissioner has exercised his discretion to extend the time limit to XX/XX/20XX to allow the small business 15 year exemption to be applied in relation to the capital gain from the disposal of the property.
Further issues for you to consider
This ruling has not fully considered the deceased’s eligibility for the small business CGT concessions. You should ensure that the deceased satisfied the relevant conditions for the concessions. Further information about the concessions can be found by searching for 'QC 22165' on www.ato.gov.au
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The deceased owned a property for more than 15 years which was used in their partnership’s business for more than 7.5 years. The partnership was a small business entity.
The deceased was over 55 years of age at the time of their death.
The deceased would have been eligible to apply the small business CGT concessions in relation to the property immediately prior to their death.
Due to provisions made in the deceased’s will the property was not able to be disposed of within two years of the deceased’s death.
In accordance with the will, the property has now devolved to a testamentary trust of which you are the primary beneficiary.
The trust intends to transfer the property to you.
You intend to dispose of the property.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 152-80
Income Tax Assessment Act 1997 Subsection 152-80(3)
Income Tax Assessment Act 1997 Section 152-105
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