Edited version of private advice

Authorisation Number: 1051908342735

Date of advice: 9 October 2021

Ruling

Subject: CGT - deceased estates - small business concessions - extension of time and permanently incapacitated

Question

Will the Commissioner exercise his discretion under subsection 152-80(3) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the time limit to XX XX XXXX to allow the small business capital gains tax concessions to be applied in relation to the property?

Answer

Yes. Having considered your circumstances and the relevant factors, the Commissioner will exercise the discretion under subsection 152-80(3) of the ITAA 1997 and allow an extension of time to XX XX XXXX. The ongoing dispute regarding title over a portion of the property delayed your ability to dispose of the property earlier.

Further information can be found on our website, ato.gov.au, by searching quick code 'QC52292'.

Question

Did the deceased individual satisfy the criteria under subparagraph 152-105 (d)(ii) of the ITAA 1997 in regard to being permanently incapacitated at the time of the Capital Gains Tax (CGT) event (being immediately prior to his death?

Answer

Yes. It is accepted the deceased individual was permanently incapacitated at the time of the CGT Event and satisfies the criteria under subparagraph 152-105 (d)(ii) of the ITAA 1997. Given they passed away within X months after being diagnosed with a terminal illness and during that time had to engage assistance to help run the business supports this finding.

This ruling applies for the following period:

Income year ended 30 June 20XX

The scheme commences on:

XX January 19XX

Relevant facts and circumstances

Your spouse acquired X% of the property in 19XX and the remainder on XX XX 19XX.

Your spouse carried on a business on the property as a sole trader throughout his ownership of it.

Your spouse was diagnosed with terminal illness and died approx. X months later at the age of XX.

During this time they sold a portion of the property to reduce debt and engaged contractors and extended family to assist with running the business due to his failing health

Following your spouse's death, you carried on the business through the estate for a period.

You were the sole beneficiary of your spouse's will.

There had been an ongoing dispute with local council over a portion of the land that began in 19XX that resulted in an issue with the title on that portion of the property.

This dispute delayed your ability to dispose of the property.

The title issue was not resolved until XX 20XX.

You entered into as contract to sell the property within X months of property title dispute being resolved.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 152-80

Income Tax Assessment Act 1997 subparagraph 152-105(d)(ii)