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Edited version of your written advice
Authorisation Number: 1051374663081
Date of advice: 17 May 2018
Ruling
Subject: CGT – Deceased Estate
Question
Will the Commissioner exercise his discretion under subsection 152-80(3) of the Income Tax Assessment Act 1997 (ITAA 1997) and allow an extension of time to the two year period until 18 June 20XX?
Answer
Yes
This ruling applies for the following period:
Year ended 30 June 20XX
The scheme commences on:
Spring 20XX
Relevant facts and circumstances
The deceased died in Spring 20XX
The deceased owned a property. This property was transferred to the deceased’s name in 19XX
This property was transferred into the name of the estate after death when the estate was established.
A beneficiary had a life interest in the property. This beneficiary died recently.
The Executor of this estate then sold the property; more than 20 years after the deceased acquired the property.
The property was used for farming from the time it was acquired by the deceased. It remained an active asset until the death of the owner.
Relevant legislative provisions
Income Tax Assessment Act 1997 Division 152
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 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.
Application to your situation
In this case, we consider that a reasonable explanation for the delay in the disposal of the property has been provided. Additionally we consider that the property was disposed of as soon as possible. We do not consider that allowing this request would cause the unsettling of others or that there is any mischief involved.
Accordingly, the Commissioner will exercise his discretion under subsection 152-80(3) of the ITAA 1997 to extend the time period.