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Edited version of private advice

Authorisation Number: 1052234376537

Date of advice: 21 March 2024

Ruling

Subject: Commissioner's discretion - deceased estates

Question

Will the Commissioner exercise his discretion allow time for the disposal of a CGT asset beyond the 2-year period as outlined in section 152-80(3) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes.

This ruling applies for the following period:

Financial year ending 20XX

The scheme commenced on:

14 December 2023

Relevant facts and circumstances

The deceased died on X August 20XX.

Property was listed on X October 20XX, an offer was made but it fell through due to zoning issues.

Property listed with different real estate on XX May 20XX.

Contract signed by potential buyer on XX July 20XX. Contract fell through due to financing issues.

Land capability assessment completed on X September 20XX.

Contract signed by buyer on XX December 20XX, settlement occurred on XX February 20XX.

The deceased satisfied the maximum net asset value test at the time of their death.

The asset satisfied the active asset test.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 152-80(3)

Reasons for decision

Under section 152-80 of the ITAA 1997, the legal personal representative or beneficiary of the deceased estate will be eligible for the small business CGT concessions where:

•         the asset is disposed of within two years of the date of death, and

•         the asset would have qualified for the small business CGT concessions if the deceased had disposed of the asset immediately before their death.

The two year time limit prescribed may be extended by the Commissioner in certain circumstances

In considering whether to extend this period, the Commissioner considers factors such as:

•         Is there prejudice to the Commissioner in doing so?

•         Will it cause any unsettling of people

•         Will there be unfairness to people in like positions or the wider public?

•         Is there any mischief involved?

You experienced circumstances being beyond your control such as zoning and financing issues. In addition, the sale was only just over 4 months past the 2 year limit. It is therefore fair and equitable for the Commissioner to exercise his discretion to grant an extension of time.

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