ATO Interpretative Decision
ATO ID 2002/945 (Withdrawn)
Income Tax
Capital Gains Tax: Small business relief - Change of choice from roll-over to retirement exemptionFOI status: may be released
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This ATO ID is withdrawn as the interpretative issue is covered in Guide to capital gains tax in Chapter 1 under the heading 'Choices.'This document incorporates revisions made since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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 who chose the small business roll-over in Subdivision 152-E of the Income Tax Assessment Act 1997 (ITAA 1997) and acquired a replacement asset, for a capital gain made after 21 September 1999, later change their choice and choose the small business retirement exemption in Subdivision 152-D of the ITAA 1997?
Decision
No. A choice made for the small business roll-over in Subdivision 152-E of the ITAA 1997 cannot later be changed.
Facts
The taxpayer made a capital gain on the sale of an active asset after 21 September 1999.
Subsequently, the taxpayer acquired a replacement asset and chose the small business roll-over in Subdivision 152-E of the ITAA 1997 to disregard the capital gain as indicated in the relevant income tax return.
After the income tax assessment had issued, the taxpayer sought the exercise of the Commissioner's discretion to choose the small business retirement exemption under Subdivision 152-D of the ITAA 1997 instead of the small business roll-over.
Reason for Decision
A choice between inconsistent courses of action, once made, is binding and cannot be withdrawn or recanted - unless this is specifically provided for. See Scarf v. Jardine (1882) 7 AppCas 345; Motor Oil Hellas (Corinth) Refineries SA v. Shipping Corporation of India (The "Kanchenjunga") [1990] 1 Lloyd's rep 391, 397 (Lord Goff of Chieveley); The Commonwealth v. Verwayen (1990) 170 CLR 394; (1990) 64 ALJR 540; (1990) 95 ALR 321.
Accordingly, a choice made for the small business roll-over in Subdivision 152-E of the ITAA 1997 is irrevocable and cannot later be changed. The taxpayer is not able to later choose the small business retirement exemption in Subdivision 152-D of the ITAA 1997 after having previously chosen the small business roll-over. This reflects the general rule that applies to the making of choices throughout the Income Tax Assessment Act 1936 and the ITAA 1997.
Paragraph 103-25(1)(b) of the ITAA 1997 allows the Commissioner to grant an extension of time in which to make a choice. However, paragraph 103-25(1)(b) has no application once a taxpayer has made a choice.
There is nothing contained in the ITAA 1997 that would permit the Commissioner to allow the taxpayer to change the choice originally made.
Date of decision: 30 August 2002Year of income: Year ended 30 June 2000
Legislative References:
Income Tax Assessment Act 1997
paragraph 103-25(1)(b).
Subdivision 152-D.
Subdivision 152-E.
Case References:
Scarf v. Jardine
(1881-82) LR 7 App Cas 345
[1990] 1 Lloyd's rep 391 The Commonwealth v. Verwayen
(1990) 170 CLR 394
(1990) 64 ALJR 540
(1990) 95 ALR 321
Keywords
Capital gains tax
CGT choice
CGT replacement asset roll-over
CGT retirement exemptions
Small business exemption
ISSN: 1445-2782
| Date: | Version: | |
| 30 August 2002 | Original statement | |
| You are here | 5 March 2010 | Archived |