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Edited version of your written advice
Authorisation Number: 1051343760719
Date of advice: 27 February 2018
Ruling
Subject: CGT - SBC - deceased estate – 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 to XX/XX/ 201X?
Answer
Yes
This ruling applies for the following periods:
Year ended 30 June 20XX
Year ended 30 June 20XX
Year ending 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts
The deceased passed away on XX/XX/201X.
The deceased purchased land (the property) after 20 September 1985.
The deceased used the land to operate primary productions businesses for more than 15 years.
At the date of death the deceased satisfied the following small business conditions:
● the basic conditions under Subdivision 152-A of the ITAA 1997
● the conditions to access the 15 year exemption under Subdivision 152-B of the ITAA 1997.
On XX/XX/201X a contract of sale for the property was entered into.
The settlement date for the sale of the property was XX/XX/201X.
The delay in selling the property was as a result time taken to find the Will of the deceased and to identify the deceased’s assets and liabilities and to attend to a legal proceeding against the deceased’s estate.
On XX/XX/201X a state Supreme Court made orders in respect to the legal proceeding against the deceased’s estate under the Successions Act of the relevant state.
On XX/XX/201X Letters of Administration were issued by a state Supreme Court for the estate of the deceased.
A capital gain was made on the sale of the property.
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 considers 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. Considering the timeframe involved, 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/201X.
Additional information
You advised that the basic conditions for eligibility for the small business CGT concessions have been met. The private ruling on whether an extension of time will be granted was issued on this basis, that is, the Commissioner did not consider whether the basic conditions have in fact been met.