Edited version of private advice

Authorisation Number: 1051970248437

Date of advice: 8 April 2022

Ruling

Subject: CGT - small business concession - deceased estate - extension of time

Question

Will the Commissioner exercise discretion under subsection 152-80(3) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow an extension of time for the Executor to apply the small business 15-year exemption on the sale of the farmland?

Answer

Yes. Having considered your circumstances and the relevant facts, the Commissioner will exercise the discretion under subsection 152-80(3) of the ITAA 1997 and allow an extension of time beyond two years to XX XXX XXXX.

Further information on the small business concession and how they apply when someone has passed away can be found on ato.gov.au by searching QC 52292.

Note: the private ruling has been limited to the question regarding whether an extension of time will be granted. You advised that the deceased would have been eligible for the small business CGT 15-year exemption on the sale of the farmland before passing away. The private ruling on whether an extension of time will be granted was issued on this basis. Therefore, the Commissioner did not consider whether the deceased was in fact entitled to the small business CGT concessions.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

The Executors of the Deceased sold a parcel of land under contract dated XX XXX 20XX.

The land was originally purchased on XX XXX XXXX by the Deceased's spouse who died in 20XX and the property passed to the Deceased.

The property was a xxxx farm from the date of the original purchase in XXXX until the 20XX financial year.

The final pay for the crop harvested was included in the Deceased's final income tax return. The Deceased passed away on XX XXX 20XX, aged X years old.

The property was originally under contract in 20XX. This fell through months later. It was then listed with a local real estate agent. There was very little interest in the property as the market was stagnant.

After the Deceased passed away, there were delays in obtaining Probate which was granted on XX XXX 20XX.

The property was listed with a new agent on XX XXX 20XX. A local business made an offer on XX XXX 20XX but the offer subsequently collapsed.

The property then went under contract as a Call Option Deed for X months for $X on XX XXX 20XX. Extensions of X months were agreed to for several reasons. The Deed lapsed on XX XXX 20XX when the proposed purchaser declined to enter into a contract to purchase the property and the $X deposit was forfeited.

The Executors then entered into a Contract of Sale dated XX XXX 20XX for $X. This contract was terminated after X days by the purchaser on XX XXX 20XX when due diligence clauses could not be satisfied.

The final purchaser signed a contract on XX XXX 20XX and settlement occurred on XX XXX 20XX. The sale price of the property was $X.

Relevant legislative provisions

Income Tax Assessment Act 1997 subsection 152-80(3)