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Edited version of private advice
Authorisation Number: 1051919855361
Date of advice: 11 November 2021
Ruling
Subject: CGT - Small business concessions
Question
Does section 152-80 of the Income Tax Assessment Act 1997 entitle you and your beneficiaries to disregard the capital gain made from the disposal of shares that your beneficiaries will inherit from a deceased estate, if a CGT event happens within two years of the date of the individual's death?
Answer
Yes. Under section 152-80 of the Income Tax Assessment Act 1997 you are entitled to disregard the capital gain made from the disposal if the CGT event happens within two years of the date of death.
This ruling applies for the following periods:
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commences on:
3 June 20XX
Relevant facts and circumstances
Person A passed away on a specified date.
Person A was over 55 years old at the time of their death.
At this time of their death Person A was the sole shareholder of Company A.
Person A acquired a number of shares pre-CGT and a number of the shares post-CGT.
A number of the pre-CGT shares were acquired on a specified date as a result of the death of Person B.
Pursuant to the last will in testimony of Person A the beneficiaries of the shares are their two sons'.
Company A owns a farming property that was acquired on a specified date.
The farming property was farmed as a cattle enterprise by:
• Person and Person B for 30 years,
• Person B and Person C for 14 years, and
• Person A solely for 3 years.
The farming business has always had an annual turnover of less than $2 million.
Due to the health issues of Person At, Company A leased the property to a third party at a specified date.
When the property was leased at a specified date the estimated net value of the grouped businesses assets was less than $6 million.
An appraisal was conducted at a specified date and the net value of the grouped business assets was over $6 million.
From a specified date to until their death Person A was winding down the trading operation of the farming property and it continues to be wound down.
The rental income derived from the farming property is less than $2 million.
The winding down of Company A will be completed within 2 years of the death of Person A and when complete the shares in Company A will be cancelled.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 328-110
Income Tax Assessment Act 1997 Division 152