ATO Interpretative Decision
ATO ID 2003/175 (Withdrawn)
Income Tax
CGT small business roll-over: replacement asset acquired by different entityFOI status: may be released
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This ATO ID is withdrawn from the database because it contains a view in respect of a provision of the Income Tax Assessment Act 1997 that applies differently in respect of CGT events happening in the 2006-07 and later income years. Further the ATOID is a simple restatement of the law and does not involve an interpretative decision.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Can a taxpayer choose the small business roll-over under section 152-410 of the Income Tax Assessment Act 1997 (ITAA 1997) for a capital gain if the replacement asset is acquired by a related entity?
Decision
No. A taxpayer can not choose the small business roll-over under section 152-410 of the ITAA 1997 for a capital gain if the replacement asset is acquired by a related entity.
Facts
A family company acquired land after 19 September 1985 and used it for primary production purposes. The land was accordingly an active asset of the company.
The land was later sold and the company wound up. A replacement active asset was acquired by the family discretionary trust and the directors of the company sought to choose the small business roll-over under section 152-410 of the ITAA 1997.
Reasons for Decision
Under section 152-410 of the ITAA 1997 you can choose the small business roll-over for a capital gain if:
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- the basic conditions in Subdivision 152-A of the ITAA 1997 are satisfied;
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- you choose a replacement asset(s) within the specified time; and
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- the replacement asset(s) satisfies the conditions in section 152-420 of the ITAA 1997.
The basic conditions require (among other things) that:
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- a CGT event happens in relation to a CGT asset of yours in an income year (paragraph 152-10(1)(a) of the ITAA 1997); and
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- the event must (apart from Division 152) result in a capital gain (paragraph 152-10(1)(b) of the ITAA 1997).
One of the conditions in section 152-420 of the ITAA 1997 is that 'you' must acquire the replacement asset within the specified time. The replacement asset must therefore be acquired by the same taxpayer who has made the capital gain and who is seeking to choose the roll-over.
Accordingly, a taxpayer can not choose the small business roll-over under section 152-410 of the ITAA 1997 for a capital gain if the replacement asset is acquired by a related entity.
Date of decision: 21 February 2003Year of income: Year ended 30 June 2002
Legislative References:
Income Tax Assessment Act 1997
Division 152
Subdivision 152-A
paragraph 152-10(1)(a)
paragraph 152-10(1)(b)
section 152-410
section 152-420
Keywords
Active asset test
Capital gains
Capital gains tax
CGT roll-over relief
Small business exemption
ISSN: 1445-2782
| Date: | Version: | |
| 21 February 2003 | Original statement | |
| You are here | 12 February 2010 | Archived |