Edited version of your private ruling

Authorisation Number: 1012468125966

Ruling

Subject: CGT - small business concessions extension of time

Question 1

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 allow the small business 15 year exemption to be applied to your share of the properties that produced a capital gain?

Answer

Yes

This ruling applies for the following periods

Year ended 30 June 2013

The scheme commenced on

1 July 2012

Relevant facts and circumstances

The arrangement that is the subject of the private ruling is described below. This description is based on the following documents. These documents form part of and are to be read with this description. The relevant documents are:

· the application for private ruling; and

· the documents provided with the application for private ruling.

The deceased passed away in year ended 30 June 20XX, aged over 55 years.

You were a beneficiary of the deceased's estate.

The deceased's estate included a number of farming properties.

The properties had been used in the deceased's farming business for over 15 years.

The deceased's net assets were valued at less than $6 million dollars prior to death.

The farming business met the definition of a small business prior to the deceased's death.

There were delays in the transfer of the titles of the properties into the names of the beneficiaries which delayed your ability to dispose of the property. Some relevant events are:

· In year ended 30 June 20XX - Trustees sent a letter of introduction and requested identification from each of the beneficiaries to commence administration of the estate. The required documents were completed and promptly returned by each beneficiary.

· In year ended 30 June 20YY -Trustees advised that Probate had been granted and requested that the beneficiaries choose how they wish to receive their share of the estate's assets. The required documents were completed and promptly returned with the beneficiaries unanimously requesting that the real estate assets be transferred to each individual's name.

· In year ended 30 June 20YY -Trustees advised that their solicitors were preparing the transfer documentation for the properties and requested documentation that was completed and returned promptly.

· In year ended 30 June 20YY -Trustees advised that the relevant State Authority required the original marriage certificate of the deceased and spouse to complete the title transfers - the deceased's spouse complied immediately.

· In year ended 30 June 20YY -Trustees advised that the relevant State Authority required a statutory declaration from the deceased's spouse in addition to the marriage certificate to complete the title transfers - the deceased's spouse returned the required documentation promptly.

· In year ended 30 June 20YY -Trustees advised that the titles had been transferred to each of the beneficiaries' individual names and that they could now proceed as the registered owners.

· In year ended 30 June 20ZZ -Trustees advised that the administration of the estate was complete.

During the administration process of the estate, each beneficiary individually made various email and phone enquiries to check on progress, often with unsatisfactory results.

You and the other beneficiaries listed the properties for sale promptly following the title transfer.

No offers on the properties were rejected; however, the market conditions were unfavourable.

The final properties to be sold are under Contract, with the latest Contract dated year ended 30 June 20ZZ. Settlement of these properties is subject to power works required to be completed by the power provider.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 152-80

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

Reasons for decision

Detailed reasoning

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 CGT concessions in respect of the sale of the deceased's asset in certain circumstances.

Specifically, the following conditions must be met:

· the asset devolves to the legal personal representative or passes to a beneficiary

· the deceased would have been able to apply the small business concessions themselves if they had disposed of the asset immediately prior to their death, and

· a CGT event happens within 2 years of the deceased's death unless the Commissioner extends the time period in accordance with subsection 152-80(3) of the ITAA 1997.

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

· evidence of an acceptable explanation for the period of the extension requested (and whether it would be fair and equitable in the circumstances to provide such an extension)

· prejudice to the Commissioner which may result from the additional time being allowed (but the mere absence of prejudice is not enough to justify the granting of an extension)

· unsettling of people, other than the Commissioner, or of established practices

· fairness to people in like positions and the wider public interest

· whether any mischief is involved, and

· consequences of the decision.

In this case, we consider that you have provided a reasonable explanation for the delay in the disposal of the CGT assets. Delays in the administration of the estate and unfavourable market conditions impacted the sale of the properties. We do not consider that allowing this request would cause the unsettling of others or that there is any mischief involved. All of the properties were sold under contract by XX date, within two years of title being transferred to you as a beneficiary.

Accordingly, the Commissioner will exercise his discretion under subsection 152-80(3) of the ITAA 1997 to extend the time period to XX date.