Edited version of your private ruling

Authorisation Number: 1012591105978

Ruling

Subject: CGT Deceased Estates

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 30 June 2014 to allow the small business capital gains tax (CGT) concessions to be applied?

Answer

Yes

This ruling applies for the following period:

Year ended 30 June 20YY

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You are the executors of the estate.

The deceased purchased a property in 19XX.

The property is still held in the estate. The will has been contested and the sale of the property has been delayed pending settlement of the dispute.

The deceased would have been eligible for the small business concessions if a sale had occurred prior to their death.

You have asked the commissioner to exercise his discretion to extend the time limit to claim the small business CGT concession until the 30 June 20XX. The dispute has been resolved and a contract for the sale of the property has now been signed.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 99

Income Tax Assessment Act 1936 Section 99A

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

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

Income Tax Rates Act 1986 Schedule 10

Reasons for decision

Section 152-80 of the 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.

A legal dispute in relation to the will has significantly delayed the sale of the property. In this case, we consider that a reasonable explanation for the delay in the disposal of the property has been provided. We do not consider that allowing this request would cause the unsettling of others or that there is any mischief involved.

Accordingly, the Commissioner will exercise his discretion under subsection 152-80(3) of the ITAA 1997 to extend the time period to 30 June 20XX.