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Edited version of private advice
Authorisation Number: 1052161416562
Date of advice: 25 August 2023
Ruling
Subject: CGT - deceased estate
Question
Would Individual B have been entitled to disregard the capital gain under Division 152 of the Income Tax Assessment Act 1997 (ITAA 1997) if a CGT event had happened in relation to the Properties immediately before their death?
Answer
Yes. Both Individual A and Individual B would have both been entitled to disregard the capital gain from their originally acquired interest in the Properties under the 15-year exemption in subdivision 152-B of the ITAA 1997 had the Properties been sold immediately before their death.
As surviving joint tenant of Individual B's Estate, and Individual A's death occurred within 2 years of Individual B's, Individual A would have also been entitled under section 152-80 of the ITAA 1997, to disregard the gain on Individual B's interest using the 15-year exemption at the time of their death.
Individual A was entitled to disregard Individual B's interest under section 152-80 of the ITAA 1997, a section that falls within Division 152. As Individual A was entitled to disregard the gain under Division 152, subject to the Commissioner providing an extension of time, the Estate is also able to utilise section 152-80 to disregard the capital gain on the interest originally acquired by Individual B.
Question 2
Will the Commissioner exercise his discretion under subsection 152-80(3) of the ITAA 1997 extending the time limit to allow the small business capital gains tax concessions to be applied in relation to the sale of the properties?
Answer
Yes. Having considered your circumstances and relevant factors, the Commissioner is able to exercise discretion under subsection 152-80(3) of the ITAA 1997 to allow an extension of the two-year period until 4 April 2023.
This ruling applies for the following period:
Year ended 30 June 2023
The scheme commenced on:
1 July 2020
Relevant facts and circumstances
Individual A and Individual B jointly owned the CGT asset which transferred to Individual B upon Individual A's death.
Individual B subsequently passed away a short time later.
Individual A operated a business on the Properties between for more than 15 years as a sole trader.
Due to Individual A and B both passing away within a short period of time the Estates have taken a significant amount of time to administer.
A contract to dispose of the CGT asset was recently entered slightly outside the two-year time limit under paragraph 152-80(1)(d) of the ITAA 1997.
Both Individual A and Individual B would have both been entitled to disregard the capital gain from their originally acquired interest in the Properties under the 15-year exemption in subdivision 152-B of the ITAA 1997 had the Properties been sold immediately before their death.
Relevant legislative provisions
Income Tax Assessment Act 1997 Division 152
Income Tax Assessment Act 1997 Subdivision 152-A
Income Tax Assessment Act 1997 Subdivision 152-B
Income Tax Assessment Act 1997 subsection 152-80(2)
Income Tax Assessment Act 1997 subsection 152-80(3)