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ATO Interpretative Decision

ATO ID 2001/695

Income Tax

Small Business Concessions: extension of time to dispose of an active asset to qualify for the small business retirement exemption
FOI status: may be released

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  • This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Will the Commissioner extend the period of time under subparagraph 152-35(a)(ii) of the Income Tax Assessment Act 1997 (ITAA 1997) within which the taxpayer can dispose of an active asset in order to obtain the small business retirement exemption?

Decision

Yes. The Commissioner's will extend the period of time under subparagraph 152-35(a)(ii) of the ITAA 1997 to dispose of the asset.

Facts

The taxpayer's business ceased operations and arrangements were made to dispose of an active asset of the business within 12 months. However a number of matters had to be dealt with in relation to one of the assets before it was legally able to be sold. These matters took in excess of 12 months to be finalised. The taxpayer did everything necessary to deal with these matters in a timely way in order to facilitate a sale of the asset at the earliest possible time.

Reasons for Decision

The finalisation of the legal requirements was a prerequisite to the sale of the asset. The nature of the work to be undertaken led to a delay in the completion of the matters and was not due to any action on the taxpayer's part. The taxpayer did everything to dispose of the asset as early as possible. It was due to the nature of the work and the unavoidable circumstances beyond the taxpayer's control that the disposal of the asset was delayed for more than 12 months. It is therefore considered reasonable to grant the extension of time for the asset to be treated as an active asset under subparagraph 152-35(a)(ii) of the ITAA 1997.

Date of decision:  25 September 2001

Year of income:  Year ending 30 June 2002

Legislative References:
Income Tax Assessment Act 1997
   Subparagraph 152-35(a)(ii)

Keywords
Capital gains tax
CGT retirement exemptions
CGT small business relief
Commissioner's discretion
Small business retirement exemption

Business Line:  C0E(CGT)

Date of publication:  30 November 2001

ISSN: 1445-2782

history
  Date: Version:
You are here 25 September 2001 Original statement
  30 January 2004 Archived

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