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Ruling
Subject: CGT rollover
Question and answer
Are you entitled to the CGT roll-over for the involuntary disposal of an asset?
Yes
This ruling applies for the following period
Year ended 30 June 2013
Year ended 30 June 2012
The scheme commenced on
1 July 2011
Relevant facts and circumstances
You own an investment property.
You acquired the property after 20 September 1985
XYZ has entered into negotiations to purchase your property at.
XYZ is a State owned Corporation which has rights to compulsorily acquire property pursuant to a statutory authority.
XYZ is prepared to acquire your property for the total amount of $
All negotiations to date have been by the private treaty process and in the event that XYZ is unable to acquire the property, consideration may be given to the compulsory acquisition of your property.
You plan to purchase another property within 12 months.
Relevant legislative provisions
Income Tax Assessment Act 1997
Section 124-70
Section 124-75
Reasons for decision
Asset compulsorily acquired
A replacement-asset roll-over may be available to you if an involuntary disposal happens to an asset owned by you because (section 124-70 of the Income Tax Assessment Act of 1997):
· it is compulsorily acquired by an Australian government agency
· it is compulsorily acquired by a private acquirer under a statutory power of compulsory acquisition other than a compulsory acquisition of minority interest under company law
· the asset, or part of it, is lost or destroyed
· the taxpayer disposes of the asset to an entity (other than a foreign government agency) after a notice was served by or on behalf of the entity inviting negotiations with a view to the entity acquiring the asset by agreement where, if those negotiations were unsuccessful, the asset would be compulsorily acquired by the entity under a statutory power (as above)
· the taxpayer disposes of land (and any depreciating asset fixed to the land) to an entity, other than a foreign government agency, where a mining lease was compulsorily granted over the land and the lease significantly affected the taxpayer's use of the land, or
· the taxpayer disposes of land (and any depreciating asset fixed to the land) to an entity, other than a foreign government agency, where a mining lease would have been compulsorily granted if the taxpayer had not disposed of the land and the lease would have significantly affected the taxpayer's use of the land.
XYZ has indicated to you, if negotiations are unsuccessful, your property can be compulsorily acquired by the entity under a statutory authority. You therefore meet a condition of an involuntary disposal being compulsory acquisition under a statutory power.
Rollover to a replacement asset
At least some of the expenditure must be incurred either:
(a) no earlier than one year, or within such further time as the Commissioner allows in special circumstances, before the event happens; or
(b) no later than one year, or within such further time as the Commissioner allows in special circumstances, after the end of the income year in which the event happens.
You indicate that you will purchase a replacement property within 12 months, therefore a roll-over will be available to you.
Therefore, you are entitled to the CGT roll-over for the involuntary disposal of an asset.
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