Edited version of private advice

Authorisation Number: 1052076106591

Date of advice: 3 February 2023

Ruling

Subject: Commissioner's discretion - deceased estate

Question

Will the Commissioner exercise discretion under subsection 152-80(3) of the Income Tax Assessment Act 1997 (ITAA 1997) and extend the two-year period for the disposal of the interest in the Property acquired by the deceased after 20 September 1985?

Answer

Yes. Having considered the circumstances and relevant facts, the Commissioner will exercise discretion under subsection 152-80(3) of ITAA 1997 and extend the two-year period to dispose of the Property.

For further information on death and the CGT small business concessions visit ato.gov.au and search for 'QC 52292'.

The extension of time does not apply to the interest the deceased acquired prior to 20 September 1985. This interest was a pre-CGT asset, and if the CGT event had happened in relation to the property immediately before the death of the deceased, the capital gain would have been disregarded under section 104-10(5) of the ITAA 1997. The basic eligibility conditions for the small business concessions under section 152-10 of the ITAA 1997 state under paragraph (b) that the CGT event would (apart from this Division) have resulted in the gain. Because a gain did not occur apart from this Division, the deceased would not have been entitled to reduce or disregard a capital gain under Division 152 if the CGT event had happened in relation to the Property immediately before their death.

The private ruling has been limited to the Commissioner's exercise of the discretion under subsection 152-80(3) of the ITAA 1997 to allow an extension of the two-year period. The Commissioner has not considered whether your mother would have met the conditions required to apply the small business CGT concessions to the relevant interest. Further information on 'small business CGT concessions' visit ato.gov.au and search for 'QC 22655'.

This ruling applies for the following periods:

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

The Taxpayers inherited the farming property (the Property) from the deceased's estate.

The Property was originally owned by the deceased and their spouse and on the spouse's passing, their share of the Property was acquired by the deceased.

The Property has been used in farming businesses of the family by multiple generations.

The Taxpayers' sibling and their spouse (the Buyers) are currently agisting the Property to use for their cattle grazing business.

The Buyers signed a contract within the two-year period from the date of the deceased death.

The Buyers were not able to secure finance to allow the Property to settle.

The Taxpayers have provided an extension for the Buyer's to secure finance. Should this not be secured by the extension date the Taxpayers will proceed with a sale by open market or auction.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 152-80