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Edited version of your written advice
Authorisation Number: 1012815069620
Ruling
Subject: Capital gains tax and the small business concessions
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 allow the small business capital gains tax (CGT) concessions to be applied?
Answer
Yes.
This ruling applies for the following periods:
Year ending 30 June 2015.
The scheme commences on:
1 July 2014.
Relevant facts and circumstances
The deceased passed away in the 2012-13 financial year.
The deceased acquired the property from in the 1995-96 financial year.
The deceased used the property in their business from acquisition until death.
The turnover of the business in the 2011-12 financial year was less than $2 million.
The deceased's Will bequeathed his/her entire estate to his/her sibling.
The deceased's parent contested the Will.
The matter was settled on in the 2014-15 financial year.
The property was disposed of two months after the matter was settled.
You submit that the deceased would have been eligible to access the small business CGT concessions immediately prior to their passing away.
You provided a copy of the deceased's Last Will and Testament.
You provided a copy of the Short Minutes of Order.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 152-80(3).
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.
In your case, the deceased's Last Will and Testament was contested. The matter was not resolved until the 2014-15 financial year, which is outside of the two year period to dispose of the asset. Once the matter was resolved, the property was sold within two months.
Having considered the particular circumstances of this case, the Commissioner will apply his discretion under subsection 152-80(3) of the ITAA 1997 and allow an extension to the two year time limit.