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Edited version of your written advice
Authorisation Number: 1012763218686
Ruling
Subject: Small business concessions
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 31 December 2014 to allow the small business capital gains tax (CGT) concessions to be applied?
Answer
Yes.
This ruling applies for the following period:
Year ending 30 June 2015
The scheme commences on:
1 July 2014
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 a personal representative of the deceased.
The deceased passed away during the 2011-12 financial year.
The deceased held interests as a tenant in common in the following properties:
a. 33.33% of property purchased prior to 20 September 1985
b. 33.33% of property purchased after 20 September 1985
c. 100% property purchased prior to 20 September 1985. During the 1993-94 financial year, the land was subdivided with the deceased retaining a third of the property.
All three properties were farmed by a partnership between the deceased and yourself for the purpose of producing primary production income.
The deceased met the conditions for the small business concessions in relation to the farming properties immediately prior to his death.
Although you also farmed the land, you were never listed as an owner on the title and are therefore not eligible for the small business concessions through ownership.
You ceased farming the land and you sold the final cattle during the 2011-12 financial year in preparation to sell the land.
The land was not listed for sale until early 2014. The delay was due to confusion over the titles. A solicitor was required to put together a clear register of ownership prior to listing.
You held an unsuccessful auction in mid-2014.
Two of the titles were sold during the 2013-14 financial year. The third title was sold during the 2014-15 financial year.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 152-80.
Reasons for decision
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 asset. Confusion over the titles impacted the sale of the properties. Considering the timeframe involved, we do not consider that allowing this request would cause the unsettling of others.
Accordingly, the Commissioner will exercise his discretion under subsection 152-80(3) of the ITAA 1997 to extend the time period to 31 December 2014.