Edited version of private advice

Authorisation Number: 1051641145992

Date of advice: 19 March 2020

Ruling

Subject: Extension of time - small business CGT concessions

Question

Will the Commissioner, pursuant to subsection 152-80(3) of the Income Tax Assessment Act 1997, grant an extension of time to allow the small business capital gains tax (CGT) concessions to be applied to the deceased estate's 50% ownership interest in the property?

Answer

Yes. Having considered your circumstances and the relevant factors, the Commissioner will allow an extension of time. Further information on death and the small business CGT concessions can be found on our website, ato.gov.au by searching QC52292.

This ruling applies for the following period/s:

Year ending 30 June 2020

The scheme commences on:

1 July 2019

Relevant facts and circumstances

The deceased acquired a 50% interest in the property post CGT as tenants in common with their spouse approximately 30 years ago.

The property did not accommodate or provide for either the deceased or their spouse's principal place of residence.

The property was used to operate a business of primary production through a partnership.

The partnership terminated upon the death of the deceased's spouse approximately 15 years ago.

The deceased spouse's 50% interest transferred to the legal personal representative of their estate.

The deceased had been given a life interest by their spouse to 50% ownership share of the property.

The deceased had an arrangement with their child (beneficiary A) to continue the business of primary production on their behalf as they were unable to physically conduct the business due to health reasons. Beneficiary A also conducted their own business of primary production on the property.

The deceased died on 20XX.

Beneficiary A indicated they would purchase the property from the Estate.

On 20XX the executor engaged a lawyer to act on the Estate's behalf.

Probate was granted in 20XX.

A second Will was produced naming five executors to the Estate. None of the beneficiaries were ever made aware of this later Will.

Consent was provided by all executors named in the Will to nominate a sole executor to the Estate.

The Estate was then required to re-apply for Probate after applying to the Supreme Court to revoke the earlier grant of probate.

Probate was granted in 20XX.

The executor was advised to await the expiration of the six month limitation period for a claim to be brought against the Estate before entering into negotiations with beneficiary A to purchase the land from the Estate.

On 20XX the Estate received a letter from beneficiary A advising they intended to purchase the land and sought and extension of time of four weeks to sort out finances.

No offers were received from beneficiary A and the exclusive sale authority was signed on 20XX to place the property up for sale.

On 20XX the lawyers for the executor of the Estate wrote to beneficiary A's lawyer advising receipt of an offer from a third party to purchase the property and gave beneficiary A until 20XX to make a formal offer to purchase the property from the Estate.

On 20XX an email from beneficiary A's lawyer advised that beneficiary A would not be making an offer and agreed to the sale of the property.

The executor negotiated special conditions to be included in the contract of sale.

The contract was signed by the executor on 20XX with settlement on 20XX.

The sale was completed within three years of the deceased's death.

Immediately prior to their death, the deceased satisfied the maximum net asset value test and was aged 55 years or older.

The deceased would have qualified for the small business CGT concessions if they had disposed of their interest in the property immediately prior to death.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 152-80