Edited version of private advice

Authorisation Number: 1052295956017

Date of advice: 27 August 2024

Ruling

Subject: Commissioner's discretion - deceased estate

Question

Will the Commissioner exercise their discretion under subsection 152-80(3) of the Income Tax Assessment Act 1997 and extend the 2-year timeframe?

Answer

Yes. As the delay in the sale of property was caused by the location and zoning of the property.

This ruling applies for the following period:

X July 20XX to XX June 20XX

The scheme commenced on:

XX July 20XX

Relevant facts and circumstances

The Deceased purchased the Property on XX July 20XX.

The Deceased owned the Property for XX years and used the Property for their business for XX years.

The Property could not be zoned as a residential area due to its location.

The Deceased passed away on X April 20XX.

The Property forms part of the Deceased estate.

At the time of their passing, the Deceased owned CGT assets with a net asset value below $6 million.

The family of the Deceased received advice from local agents that because of the Property's location the pool of potential buyers would be limited.

the deceased's family were involved in a dispute regarding the property's location. This dispute carried on until XX May 20XX.

The contract for the disposal of the Property was signed on X June 20XX and settled on XX June 20XX.

Relevant legislative provisions

Income Tax Assessment Act 1997, section 152-80.

Reasons for decision

The trustee of a trust established by the will of a deceased individual can apply the small business CGT concessions in respect of the sale of the deceased's CGT assets. To apply the small business CGT concessions the CGT asset must form part of the deceased estate and a CGT event must happen to that asset within 2 years of the individuals death. The deceased must also have been entitled to reduce or disregard the capital gain if the CGT event had happened immediately before their death.[1]

The Property forms part of the deceased individual's estate.

The deceased would have been entitled to reduce or disregard the capital gain if the CGT event happened in relation to the Property immediately before their death.[2]

The CGT event did not happen within 2 years of the Deceased's passing.

The Commissioner can exercise discretion and extend the 2-year time limit.[3]

Application to your Circumstances

The farm could not be zoned for residential development and had limited development potential due to its location.

Furthermore, the deceased's family were involved in a dispute regarding the property's location. This caused additional delay in the sale of the Property.

The location of the Property limited potential buyers causing delay in the selling of the Property.

The Commissioner will exercise discretion to extend the 2-year time limit to XX June 20XX.[4]

[1] ITAA 1997 Subsection 152-80(1).

[2] ITAA 1997 Division 152.

[3] ITAA 1997 Subsection 152-80(3).

[4] ITAA 1997 Subsection 152-80(3); ITAA 1997Paragraph 152-80(1)(d).