Edited version of your written advice

Authorisation Number: 1013022947141

Date of advice: 24 May 2016

Ruling

Subject: Capital gains tax - small business concession - extension of time

Question:

Will the Commissioner exercise his discretion under subsection 152-80(3) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the 2 year time limit to XX/XX/XXXX?

Answer:

Yes

This ruling applies for the following period:

Year ended 30 June 2015

The scheme commenced on:

1 July 2014

Relevant facts

You and your spouse formed a partnership.

You and your spouse purchased a property.

The partnership used the property to carry on its business activities.

Your spouse passed away a few years ago.

You continued to operate the partnership's business activity.

The partnership's business activity ceased as a result of you suffering an illness.

Your spouse's 50% interest in the property was an active asset for more than 71/2 years during the period of ownership.

The property was sold on XX/XX/XXXX.

The delay in selling the property was as a result of your illness and the need to undertake structural repairs to the property.

Your previous tax advisor did not provide you with the correct information as to the operation of the two year time limit to access the CGT Small Business Concessions following the death of your spouse.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 152-80

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, passes to a beneficiary or is acquired by a surviving joint tenant

• 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 should be exercised, the Commissioner 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. Also, we do not consider 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 XX/XX/XXXX.

Additional information

In your private ruling request you have indicated that you may qualify for the small business CGT concessions. The Commissioner has not considered your eligibility for the small business CGT concessions in this ruling. You should ensure that you satisfy the basic conditions and any other relevant conditions. More information on Capital gains tax concessions for small business 2015 is available on our website at www.ato.gov.au.