Edited version of your written advice

Authorisation Number: 1012996111616

Date of advice: 12 April 2016

Ruling

Subject: Will the Commissioner exercise his discretion to allow longer than 2 years to sell the asset

Question

Will the Commissioner exercise his discretion under paragraph 152-80(3) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow the beneficiaries to treat the sale of the asset as if it was sold within the two year limit as outlined under paragraph 152-80(1)(d) of the ITAA 1997?

Answer

Yes.

This ruling applies for the following period

Year ended 30 June 2015

The scheme commences on

1 July 2014

Relevant facts and circumstances

The deceased owned an asset which was left to a number of beneficiaries.

There were several difficulties faced by the executor and beneficiaries which resulted in the sale of the asset taking place more than 2 years after the death of the deceased.

Assumption

It is assumed that the deceased would have been entitled to SB CGT concessions under Division 152 of the ITAA 1997 immediately prior to their death.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 152-80

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 this case the asset formed part of the deceased's estate and the lot passed to their beneficiaries after their death. The deceased would have been entitled to reduce a capital gain under Division 152 (SB CGT concessions) if a CGT event had happened in relation to the asset immediately before their death.

Taking into account the factors above, in this case the Commissioner will extend the time limit outlined in paragraph (1)(d) under subsection 152-80(3) of the ITAA 1997.

Further issues for you to consider

This ruling has not fully considered your eligibility for the small business CGT concessions. You should ensure that you satisfy the relevant conditions for the concessions. More information is available in the publication Advanced guide to capital gains tax concessions for small business (NAT 3359), which is available on our website www.ato.gov.au.