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Edited version of private ruling
Authorisation Number: 1011496935311
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Ruling
Subject: Capital gains tax - small business concessions
Question
Will the Commissioner exercise his discretion to extend the replacement asset period under subsection 104-190 of the Income Tax Assessment Act 1997 (ITAA 1997) until the dated requested?
Answer
Yes.
This ruling applies for the following period:
1 July 2009 to 30 June 2010
The scheme commences on:
1 July 2009
Relevant facts and circumstances
The taxpayer owned and operated a business. The business consisted of a number of separate parts which were sold separately.
The taxpayer elected to use the small business roll-over in the relevant income tax return on the remaining net capital gain. As the gain was rolled over in a specific income tax return, the taxpayer was mistakenly under the impression that they had until the end of a certain income tax year to purchase the replacement asset.
The taxpayer has now purchased a suitable replacement asset.
The taxpayer has stated that it was always their intention to use the roll-over and only failed to do so within the relevant period as they were mistaken as to the time limit that was available.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 104-190(2),
Income Tax Assessment Act 1997 Subsection 104-197(1),
Income Tax Assessment Act 1997 Subsection 104-197(2),
Income Tax Assessment Act 1997 Subsection 104-197(5),
Income Tax Assessment Act 1997 Section 152-410 and
Income Tax Assessment Act 1997 Section 152-415.
Reasons for decision
Under subsection 104-197(1) of the ITAA 1997, CGT event J5 happens if you chose a small business roll-over under Subdivision 152-E of the ITAA 1997 and have not acquired a replacement asset by the end of the replacement asset period.
Subsection 104-197(5) of the ITAA 1997 provides for the replacement asset period to be modified or extended.
The Commissioner may exercise his discretion to extend the replacement asset period, as provided in subsection 104-190(2) of the ITAA 1997.
In determining if the discretion to allow a period longer than 2 years would be exercised, the Commissioner has considered the following factors:
- whether there is evidence of an acceptable explanation for the period of extension requested and whether it would be fair and equitable in the circumstances to provide such an extension
- whether there is any prejudice to the Commissioner if the additional time is allowed, however the mere absence of prejudice is not enough to justify the granting of an extension
- whether there is any unsettling of people, other than the Commissioner, or of established practices
- fairness to people in like positions and the wider public interest
- whether there is any mischief involved, and
- the consequences of the decision.
Application to your circumstances
After considering the relevant facts against your circumstances, it is considered that you have provided a reasonable and acceptable explanation for the delay in acquiring a replacement asset. By allowing an extension of time it would not prejudice the Commissioner, nor is it unfair to other people in similar positions.
Based on the facts and your submission, it is considered that the Commissioner will exercise his discretion to extend the replacement asset period until the date requested.
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