Edited version of private advice

Authorisation Number: 1052367923211

Date of advice: 03 March 2025

Ruling

Subject: CGT - small business concessions

Question 1

Will the Commissioner exercise their discretion under subsection 152-80(3) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the time limit for the property to be disposed of so the small business capital gains tax (CGT) concessions can be applied to the CGT event?

Answer 1

Yes. The Commissioner will extend the 2-year time limit to dispose the property under subsection 152-80(3) of the ITAA 1997. The delay in the sale of the property was caused by a long dispute regarding the Will of the deceased which persisted for a number of years after their death. The Commissioner finds the delay in the sale of the property to be outside the control of the trustee and will extend the period to dispose of the asset.

This ruling applies for the following periods:

Year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

In 19XX, the deceased, Child 1 and Child 2 acquired the property and used it in a business together in a partnership (business). The deceased owned half the property; Child 1 owned a quarter and Child 2 owned the remaining quarter.

In 19XX, the deceased prepared a copy of their Will. In 19XX, Child 2 transferred their quarter of the property to the the deceased and Child 1. As a result, the deceased owned Xths of the property while Child 1 owned Xths. The property continued to be used in the business and the deceased and Child 1 resided in a principal place of residence situated on the property.

In 20XX, the deceased changed their Will.

In 20XX, the deceased passed away and their share of the property was transferred to the legal personal representative of their deceased estate. The two executors/beneficiaries of Barrymore's estate were Child 1 and Child 3.

Solicitors were appointed to manage the estate. When the deceased's Will was read, Child 1 had issues as from their understanding the Will changed without their knowledge. This caused a relationship breakdown and dispute between Child 1 and Child 3. All person-to-person communication ceased.

Child 1 and Child 3 engaged separate solicitors to handle the dispute. All communication between Child 1 and Child 3 was conducted between the solicitors.

In 20XX, Child 1 terminated their solicitors and engaged with new solicitors. A further dispute also commenced over the valuation of the property. The dispute included a disagreement about the percentage of monetary value to be distributed once the property was sold. Child 1 received and accepted an offer to settle as per mediation, however it is asserted Child 1 was unable to meet conditions.

In 20XX, it is asserted Child 3 consulted with a barrister to gain advice on what was the best way to finalise settlement of the estate.

Throughout 20XX, solicitors continued to be engaged.

In 20XX, the COVID-19 pandemic broke out and further slowed the process for selling the property.

In 20XX, Child 1 again received and accepted an offer to settle as per mediation, however it is asserted Child 1 was unable to meet conditions. Child 3 terminated their solicitors and engaged with new solicitors.

Throughout 20XX, Child 1 and Child 3 continued to engage with their solicitors.

In 20XX, the property was first put on the market. The property was not put on the market until then due to ongoing disagreements of valuation of the property and percentages to distribute to the beneficiaries.

From mediation, Child 1 was to purchase Child 3's share from the estate. However, Child 1 could not get finance approved. Child 1 again received and accepted an offer to settle as per mediation, however it is asserted Child 1 was unable to meet conditions.

In 20XX, Child 1 and Child 3 came to an agreement upon sale price and distribution percentages. As soon as there was an agreement, a transmission application was signed by the executors so a sale could be affected. The property was sold.

There is still an ongoing dispute over the estate.

Relevant legislative provisions

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