| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your private ruling
Authorisation Number: 1012144752554
This edited version of your ruling will be published in the public register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.
Ruling
Subject: Commissioner's discretion
Question
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 the replacement asset to be acquired?
Answer
Yes.
This ruling applies for the following periods:
Year ending 30 June 2009
Year ending 30 June 2010
Year ending 30 June 2011
The scheme commences on:
1 July 2008
Relevant facts and circumstances
You owned property A.
You began negotiating with a company to sell property A.
Six months later, you began negotiations to purchase property B, dependent on the sale of the property A.
Negotiations with the company advanced so you shifted your focus to the purchase of property B.
The owners of the property B wanted security and a contract to purchase was executed.
The funds to purchase the property were advanced by the bank, but were dependent on the sale of property A.
You sold property A to the company more than 12 months after you purchased property B
You were approached by the company to sell property A before you commenced negotiations for the purchase of property B.
The purchase of property B was conditional on the sale of property A.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 104-185 and
Income Tax Assessment Act 1997 section 104-190
Reasons for decision
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.
In determining if the discretion would be exercised the Commissioner has considered the following factors:
· there should be 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;
· account must be had to 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;
· account must be had of any unsettling of people, other than the Commissioner, or of established practices;
· there must be a 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.
Having considered your circumstances, with particular regard to the fact that:
· you have made a genuine attempt to comply with the requirements of subsection 104-185(1) by commencing negotiations to sell the asset 6 months prior to starting negotiations for the acquisition of the replacement asset,
· the Commissioner is able to apply his discretion under subsection 104-190(2) and allow a reasonable extension to the time limit.
In view of this, the time limit that would require the replacement asset to be purchased no sooner than 12 months prior to the CGT event will be extended to commence earlier in accordance with your request.
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
