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  • Request for an extension of time to make a capital election

    The Commissioner has discretion to grant a MIT an extension of time to make an election into capital treatment.

    Who can make a request for an extension of time?

    Generally, the trustee of a MIT must apply to the Commissioner to request for an extension of time to make an election into capital treatment.

    How can a request be made?

    The application should be in writing and include sufficient information to demonstrate why discretion would be reasonable.

    The written request should:

    • provide details of the circumstances giving rise to why the election was not made on time
    • propose a date by which the election will be made
    • give assurance future obligations will be met on time once the stated circumstances are resolved.

    Note: There is no prescribed application form.

    What factors will the Commissioner consider in exercising the discretion?

    We follow these guidelines when making our decision:

    • Where an extension is granted, it will generally be on a short-term basis to allow the trustee to overcome the problems preventing them from making the election. The extension will generally only be provided for a short period after the date the election should have been made.
    • Consideration will be given to how soon steps were taken to make an election and whether a timely request was made to the Commissioner to seek an extension of time.
    • Each case will be considered on its merits based on all the relevant facts and circumstances.
    • The Commissioner will have regard to the subject matter, scope and purpose of subsection 275-115(3) of the ITAA 1997 which establishes a deadline for making an election into capital treatment.
    • The Commissioner may consider whether the entity has acted in a manner consistent with the proposed election, based on the way it has prepared its accounts and returns.
    • The Commissioner will consider whether there were circumstances beyond the control of the trustee that contributed to the delay in making the election, whether reasonable steps were taken to mitigate the effect of those circumstances, and whether the trustee will be able to make the election at a particular time in future.
    • Consequences of the proposed extension of time for making the election may be considered, including any impact on distribution statements or on ATO lodgment obligations of the MIT.
    • The Commissioner must ensure he does not confer an advantage on a taxpayer or group of taxpayers.
    • The Commissioner will have regard to whether the request for an extension of time is for an improper purpose or in bad faith.

    How will I be informed of the exercise of the Commissioner's discretion?

    If the discretion is exercised following your request, you will receive written advice of a new date by which the election must be made.

    If the discretion is not exercised, you will be advised in writing, and given the reasons for that decision.

      Last modified: 09 May 2016QC 23181