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Edited version of your written advice
Authorisation Number: 1012755652761
Ruling
Subject: Capital gains tax
Question
Will the Commissioner allow further time as provided in paragraph 103-25(1)(b) of the ITAA 1997 for you to choose to apply the small business retirement exemption in Subdivision 152-D of the ITAA 1997 to a capital gain that arose in the 2011-12 financial year?
Answer
Yes.
This ruling applies for the following period
Year ended 30 June 2012
Year ended 30 June 2013
Year ended 30 June 2014
Year ended 30 June 2015
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You and your spouse operate a business.
In 20XX you executed an easement contract.
Due to delays in the construction, you have received additional compensation in the 2013-14 financial year.
The additional compensation forms part of the purchase price of the easement.
You satisfy the conditions for the small business retirement exemption.
Relevant legislative provisions
Income Tax Assessment Act 1997 subsection 103-25(1)
Income Tax Assessment Act 1997 subsection 103-25(2)
Income Tax Assessment Act 1997 paragraph 103-25(3)(b)
Income Tax Assessment Act 1997 subsection 152-315(4)
Reasons for decision
You may choose to disregard all or part of a capital gain under the small business retirement exemption if you satisfy certain conditions.
The general rule is that a choice available under the CGT provisions once made cannot be changed. Generally, such a choice must be made by the time the income tax return is lodged, or within such further time as the Commissioner allows (subsection 103-25(1) of the ITAA 1997).
Under subsection 103-25(2) of the ITAA 1997, the way you prepare your income tax return is sufficient evidence of the making of the choice. Paragraph 103-25(3)(b) of the ITAA 1997, however, contains an exception in relation to the small business retirement exemption, as subsection 152-315(4) of the ITAA 1997 requires the choice for this exemption to be made in writing.
In determining if the Commissioner should use his discretion to allow an extension of time the following will be considered:
• 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 regards to your circumstances and the factors outline above the Commissioner considers it fair and equitable to exercise his discretion. An extension of time is allowed for you to make the choice to apply the retirement exemption
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