| Disclaimer This edited version has been archived due to the length of time since original publication.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 written advice
Authorisation Number: 1012706061349
Ruling
Subject: CGT - SBC - active asset rollover extension of time
Question 1
Will the Commissioner exercise his discretion under section 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the replacement asset period?
Answer
Yes.
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 disposed of an interest in a capital gains tax (CGT) asset in the 2011 financial year and incurred a capital gain on the disposal.
You utilised the small business rollover exemption under subdivision 152-E of the ITAA 1997 when lodging your return for the year ended 30 June 2011, with the intention of acquiring a replacement asset within the two year period.
Your intention is to acquire another asset, utilising the funds from the disposal of your original asset.
You have not been successful in your search for a replacement asset, despite your sustained efforts.
This has been influence by the following circumstances:
• The lack of suitable assets coming on to the market
• The continuing drought conditions in the region
• The reluctance of financiers to provide finance to prospective buyers
Over the past year you have inspected various properties in several different regions, however you have been unable to find a suitable asset.
Your spouse has experienced significant medical issues that have continued to occur since your last private ruling application.
You have had to nurse your spouse throughout the whole period, extending over several financial years.
These circumstances have seriously curtailed your efforts to search for a replacement property.
You have previously applied for and been granted extensions of time.
You seek a further extension of one year to extend the replacement period.
Relevant legislative provisions
Income Tax Assessment Act 1997 (ITAA 1997) section 104-185
Income Tax Assessment Act 1997 (ITAA 1997) section 104-190
Reasons for decision
The small business rollover allows you to defer the capital gain made from a 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 rollover, 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) of the ITAA 1997 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
• consideration of the consequences.
Your search for a suitable replacement asset has been prolonged due to a number of circumstances, such as the poor market for the asset, continued regional drought conditions, reluctance of financiers to provide finance, and your spouse's continual health issues. Although you have considered a number of assets over the past year, your efforts have been significantly impaired by your spouse's most recent health concerns and the lack of suitable replacement assets.
Having considered your situation, we consider you have made a genuine attempt to acquire a replacement asset. The extension of time that you are requesting is not unreasonable, given your circumstances. Accordingly, the Commissioner is able to apply his discretion under subsection 104-190(2) of the ITAA 1997 and allow a reasonable extension to the time limit.
In view of this, the replacement asset period will be extended, 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).
