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  • Making choices and requesting extensions

    There are a number of provisions in the capital gains tax (CGT) laws that allow you to make a choice.

    Some of the provisions allow you to defer or roll over a capital gain you make when a CGT event (such as exchanging an asset for a replacement asset) happens.

    On this page:

    When and how you make a choice

    The general rule is that you must make a choice to defer or roll over your capital gain by the day you lodge the tax return for the year in which the relevant CGT event happened. The way you prepare your tax return is sufficient evidence of the choice.

    However, there are some exceptions:

    • Companies must make some decisions about replacement asset rollovers earlier than the day they lodge their tax return.
    • Choices relating to the small business retirement exemption must be made in writing.
    • Choices relating to the assessment of capital gains of resident testamentary trusts must be made by a trustee within a specified period.

    Your choice is binding. Once you make a choice, it can't be changed.

    We consider you haven't made a choice if you lodge your tax return without being aware that either:

    • events have happened that required you to make a choice
    • a choice was available
    • a choice you made was not valid.

    In these circumstances, we may allow you further time to make a choice.

    Requesting an extension of time

    If you've lodged a tax return without knowing a choice was available to you under CGT law, you can apply to us to allow you further time to make the choice. You do this by completing one of the following:

    We'll consider your request and advise you of our decision. We decide each case on its merits, considering factors such as whether:

    • you have an acceptable explanation for not making the choice by the time it should have been made
    • it would be fair and equitable in the circumstances to allow you more time to make a choice
    • prejudice to the ATO might result from additional time being allowed to you (the absence of prejudice by itself is not enough to justify granting an extension)
    • it would be fair and equitable to people in similar positions and the wider public interest
    • any mischief is involved.

    Businesses wishing to use the small business CGT concessions can also apply for an extension in situations where they need to take a certain action within a prescribed period of time – for example:

    • Where your business has ceased, the active asset test period for a CGT event (for example, the sale of a former business asset) ends when the business ceased if that occurred in the 12 months before the CGT event.
    • If you previously chose the small business rollover and you don't acquire a replacement asset or make a capital improvement to an existing asset within the prescribed period, then a further CGT event happens. The prescribed period starts one year before and ends two years after the last CGT event happens in the year for which you choose the rollover.

    The application process and criteria are the same as those described above.

    See also:

    Last modified: 01 Jul 2020QC 18383