Edited version of private advice

Authorisation Number: 1052298666674

Date of advice: 4 September 2024

Ruling

Subject: Commissioner's discretion - deceased estate

Question

Will the Commissioner exercise his discretion in subsection 152-80(3) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the 2 year time limit to enable the small business CGT concessions in Division 152 of ITAA 1997 to be applied in relation to the sale of the property?

Answer

Yes.

Having considered your circumstances and the relevant factors, the Commissioner will allow an extension of time as there is evidence of an acceptable explanation for the period of extension requested, and it would be fair and equitable in the circumstances to provide the extension.

Note: This ruling is limited to the question raised being whether an extension of the time limit will be granted. You have advised that the deceased would have been eligible to apply the small business concessions if they had disposed of the property immediately before their death, and subsequently you met the basic conditions as an affiliate of the deceased. The private ruling on whether an extension of the time limit will be granted was issued on the basis that the Commissioner did not consider your or the deceased's eligibility for the small business concessions.

This ruling applies for the following periods:

Year ended 30 June 2018

Year ended 30 June 2019

Year ended 30 June 2020

Year ended 30 June 2021

Year ended 30 June 2022

Year ended 30 June 2023

Year ended 30 June 2024

The scheme commenced on:

1 July 2017

Relevant facts and circumstances

You and your late spouse acquired a property as joint tenants.

Your spouse passed away during the year ended 30 June 20XX.

A business was carried on at the property in your spouse's name only.

You did not live at the property.

You are aged over 70 and having received the remaining 50% share of the property following your spouse's death you became the sole owner of the property.

The area where the property is located experienced a drought from 2017 onwards. Before the drought water had not been an issue because there were two main creeks running all year round through the property and 8 dams. There was always abundance of feed prior to the drought. The recent drought was the only time during your ownership period that feed and water became an issue.

Once the drought set in, with no water in the dams and no feed available the business was severely impacted. You tried buying feed but soon decided that it was costing too much and like many of your neighbours started to sell down much of your stock.

Due to compounding circumstances, you were unable to visit the property to initiate the selling process until 7 months after your spouse's death.

11 months after your spouse's death you engaged a real estate agent to sell the property.

The agent engaged in discussions with an interested buyer, but nothing came of these discussions and there were no other interested buyers.

In 2019 the property was impacted by bushfires, where half of the property was burned.

The lengthy Covid lockdowns and associated issues followed commencing in March 2020 and going through until 2022, during which time you were unable to visit the property and the lockdowns added to the difficulty of marketing the property to potential buyers.

There were several major floods affecting northern NSW including in early and late 2020, early 2021, early, mid and late 2022 and again in early 2023, these flood events impacted the property.

The effect of the bushfires on the property was to leave the hillsides completely without foliage or large trees, which in turn made the impact of the various floods that much worse as there was nothing to stop the washout of much of the property, in addition to washing out the roads and making the property inaccessible for long periods.

Throughout 2021 a severe mouse plague which was another factor hampering your attempts to sell the property.

You maintained contact with selling agents at various times throughout this process and attempts were made to keep the sale process going.

Discussions took place with at least one potential buyer over several months resulting in a sale contract being signed and settlement taking place in the year ended 30 June 2024.

Relevant legislative provisions

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

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