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Edited version of private ruling
Authorisation Number: 1011474440666
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Ruling
Subject: Small business roll over - extension of time
Question 1
Will the Commissioner, pursuant to subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997), extend the time limit set out in paragraph 104-185(1)(a) of the ITAA 1997 for your replacement asset to be acquired?
Answer
Yes.
This ruling applies for the following period:
1 July 2010 to 30 June 2011
The scheme commences on:
1 July 2010
Relevant facts and circumstances
You advise in the year you made a capital gain on the disposal of a 50% interest in properties sold to your child some time ago.
You state that the conditions necessary to access the small business concessions under Subdivision 152-A of the ITAA 1997 were satisfied and roll over relief was elected and applied to the balance of the capital gain under Subdivision 152-E of the ITAA 1997.
You advise various replacement assets and improvements to active assets have been acquired by you since the trigger date of the capital gain. These assets have been contributed and used in a partnership business in which you are involved as a passive investor.
You also advise that in recent months serious family health issues have intervened placing a considerable amount of pressure and stress on you and has resulted in a delay of the acquisition of further replacement assets.
Given these circumstances you would like to request a further extension to the 2 year replacement asset period.
Your tax agent further advised the properties sold to your child were cattle grazing rural properties.
Relevant legislative provisions
Subdivision 115-A of the Income Tax Assessment Act 1997
Subdivision 152-E of the Income Tax Assessment Act 1997
Subsection 104-185(1) of the Income Tax Assessment Act 1997
Paragraph 104-185(1)(a) of the Income Tax Assessment Act 1997
Subsection 104-190(2) of the Income Tax Assessment Act 1997
Reasons for decision
Small business roll-over
The small business roll-over allows you to defer the capital gain made from a Capital Gains Tax (CGT) event if you acquire one or more replacement assets and satisfy certain conditions. The conditions which must be met to obtain relief are set out in Subdivision 152-A of the ITAA 1997.
For you to obtain a roll-over, subsection 104-185(1) of the ITAA 1997 requires you to acquire a replacement asset within a period starting one year before, and ending two years after the date of disposal of the original asset. Subsection 104-190(2) states that the Commissioner may exercise his discretion to extend those time limits.
Commissioner's discretion
In determining if the discretion would be exercised the Commissioner has considered the following factors:
· evidence of an acceptable explanation for the period of extension requested and that it would be fair and equitable in the circumstances to provide such an extension
· any prejudice to the Commissioner which may result from the additional time being allowed, however the mere absence of prejudice is not enough to justify the granting of an extension
· any unsettling of people, other than the Commissioner, or of established practices
· consideration of fairness to people in like positions and the wider public interest
· whether there is any mischief involved, and
· a consideration of the consequences.
Your particular circumstances
In your situation the original asset was disposed of some time ago and in accordance with the roll-over provisions the period for acquisition of a replacement asset ends two years after the date of disposal, which would be close to the current time. You have acquired various replacement assets and improvements to active assets since the sale, however serious family health issues has resulted in a delay of the acquisition of further replacement assets. You request an extension to the replacement asset period.
Having considered the relevant facts, the Commissioner is able to apply his discretion under subsection 104-190(2) of the ITAA 1997 and allow an extension of time limit. Allowing an extension is not prejudicial to the Commissioner in this case nor is it unfair to other people in similar positions.
The two year time limit will be extended.
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