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Edited version of private advice
Authorisation Number: 1051940746317
Date of advice: 19 January 2022
Ruling
Subject: 15 year exemption - deceased estate
Question
Will the Commissioner exercise the discretion under subsection 152-80(3) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the time limit to allow the small business 15 year exemption to be applied on the sale of the land?
Answer
Yes. Had the deceased disposed of the land prior to their death, they would have had access to the small business 15 year exemption.
Having considered the facts and circumstances of the administration of the Estate and sale of those assets, the Commissioner will exercise the discretion under subsection 152-80(3) of the ITAA 1997 and extend the two year period in which the Executor can access the small business 15 year exemption to XX/XX/XXXX.
This ruling applies for the following period:
Year ended 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The deceased passed away on XX/XX/XXXX. At the time of their death they were over 55 years of age. Probate was granted on XX/XX/XXXX.
At the time of the deceased's death, they had operated a business on land owned by them for over 15 years before ceasing operations and leasing the property to an unrealted third-party. The lease gave the third-party the option to purchase the land at a value agreed upon by both parties.
After probate was granted, a valuation was obtained and negotiations were entered by into by the Executor with the third-party lessee. A contract of sale was signed however the two year period had then passed.
The deceased net assets were less than $XXX at the date of their death. The deceased did not have any affiliates or connected entities at the date of their death.
The land had been used by the deceased in their business for over 15 years.
The deceased would have been eligible to apply the small business 15 year exemption had the land been sold just prior to their death.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 152-10
Income Tax Assessment Act 1997 Section 152-35
Income Tax Assessment Act 1997 Section 152-40
Income Tax Assessment Act 1997 Section 152-80
Income Tax Assessment Act 1997 Subsection 152-80(3)
Income Tax Assessment Act 1997 Section 152-105