Edited version of private advice

Authorisation Number: 1052328313557

Date of advice: 12 November 2024

Ruling

Subject: CGT - small business concessions

Question 1

Will the Commissioner exercise their discretion to extend the time limit beyond the 2-year period in relation to the sale of the property of the trustee of the deceased estate, under subsection 152-80(3) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes. The Commissioner will extend the 2-year time limit to dispose of the deceased estates asset under subsection 152-80(3) of the ITAA 1997. The delay in the sale of the property was caused by the will being contested, and probate not being granted until after the 2-year time period ended. The Commissioner finds that they delay in the sale of the property to be outside the control of the trustee and will extend the time period to dispose of the asset.

Question 2

Is the trustee eligible for the small business 50% reduction on the sale of the property under section 152-205 of the ITAA 1997?

Answer

Yes. The trustee is eligible for the small business 50% reduction on the property under section 152-205 of the ITAA 1997. To be eligible for the 50% reduction, you must meet the basic conditions under section 152-10 of the ITAA 1997. The deceased met the basic conditions because:

•         The property was sold which resulted in a capital gain.

•         The deceased satisfied the maximum net asset value test

•         The property satisfies the active asset test.

Because the deceased met the basic conditions for relief before their death, the trustee of the estate will have the capital gain made on the sale of the property reduced by 50%, unless they choose not to under section 152-220 of the ITAA 1997.

Question 3

Is the trustee eligible for the retirement exemption under section 152-305 of the ITAA 1997 on the sale of the property?

Answer

Yes. The trustee is eligible for the retirement exemption and can discard the capital gain on the sale of the property up to a value of $500,000. This is because the deceased met the basic conditions for relief before their death. Additionally, the trustee does not have to make a contribution to a complying superannuation fund or retirement savings account.

This ruling applies for the following period:

X of XX 20XX

The scheme commenced on:

X of XX 20XX

Relevant facts and circumstances

The property was owned by the deceased.

The property was used by the deceased in business.

The deceased passed away on X of XX 20XX.

The deceased's net asset value just before they passed away was less than $X million.

The deceased operated the business on the property up until the date of death.

The ownership of the property was transferred from the deceased to the trustee of the deceased estate.

The deceased's will was contested.

Mediation was granted after the 2-year disposal period expired.

The property has been sold.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 152-10

Income Tax Assessment Act 1997 section 152-15

Income Tax Assessment Act 1997 section 152-35

Income Tax Assessment Act 1997 section 152-80

Income Tax Assessment Act 1997 section 152-205

Income Tax Assessment Act 1997 section 152-220

Income Tax Assessment Act 1997 section 152-305