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Edited version of your written advice
Authorisation Number: 1013052318821
Date of advice: 18 July 2016
Ruling
Subject: CGT - SBC - deceased estate - Commissioner's discretion - 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 two year time limit?
Answer:
Yes
This ruling applies for the following periods:
Year ended 30 June 2014
Year ended 30 June 2015
The scheme commenced on:
1 July 2013
Relevant facts
The deceased at the date of their death met the eligibility criteria for the small business capital gains tax (CGT) concessions in relation to certain properties.
There were errors on the titles to the properties which had to be corrected before the properties could be sold. This process took some time.
The executors of the estate made the properties available for sale once the errors on the titles were corrected.
The properties were sold shortly after the two year period had expired after the date of death of the deceased.
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 assets. 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 when the CGT assets were disposed of.