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Edited version of your written advice

Authorisation Number: 1012688792047

Ruling

Subject: CGT - SBC - extension of time to acquire a replacement asset

Question

Will the Commissioner exercise his discretion under subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the replacement asset period to 20XX?

Answer

No

This ruling applies for the following periods:

Year ending 30 June 2015

Year ending 30 June 2016

The scheme commences on:

1 July 2014

Relevant facts and circumstances

You sold a CGT asset in 20XX.

The sale contract contained a restraint of trade clause.

At the time of the sale you were not in a position as a family to set up a new business. You had a very young child and really couldn't commit to the time needed to start a new business.

More than a year later you went overseas as both you and your spouse have family there.

You returned overseas almost a X years later for approximately X months, as there was an illness in the family you are spending time with them.

You are looking to return overseas again around approximately X years from now.

You have been in discussions with a business owner who is looking for a partner in a new office. Together you have chosen a location and are doing ground work with a view to open towards the end of 20XX.

You have asked for an extension of time to acquire a replacement asset to 20XX.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subsection 104-190(2)

Reasons for decision

In order to apply the small business rollover, a replacement asset must be acquired within two years after the relevant CGT event. However the Commissioner may extend the replacement asset period in certain circumstances (subsection 104-190(2) of the ITAA 1997).

The relevant factors in determining whether to extend the replacement asset period are:

Application to your circumstances

You disposed of your real estate business on 31 July 2011. You were required to acquire a replacement asset within two years of the disposal date.

In considering whether to exercise his discretion, the Commissioner needs to be satisfied that there were circumstances beyond your control that prevented you from finding a replacement asset within two years. You have stated that the initial delay in purchasing a replacement asset was because you were not in a position as a family as you had a very young child and couldn't commit to the time needed to start a new business. A subsequent delay was due to an illness in your spouse's family overseas. This is not considered to be acceptable explanations for the delay.

After considering both the relevant factors for determining whether to exercise the Commissioner's discretion and the specific circumstances of this case, we consider that your circumstances do not warrant an extension of time. This is for the following reasons:

Therefore, the Commissioner will not exercise the discretion under subsection 104-190(2) of the ITAA 1997 to extend the period for acquiring the replacement asset.


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