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This edited version has been archived due to the length of time since original publication.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: 1012802964812

Ruling

Subject: EOT - replacement asset

Question

Will the Commissioner, pursuant to subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997), extend the time limit for the replacement asset to be acquired to XX/XX/XXXX?

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 a business and therefore had a CGT event during the 2012-13 financial year.

You elected to defer the capital gain under the small business roll-over concession.

You have been looking to set up a new business. The set-up of this business has been delayed by hold ups in the construction of the new premises that were outside of your control.

Your new premises are nearly ready and a lease has been signed by the end of the 2014-15 financial year.

The estimated set up costs in relation to the new business will be in excess of the capital gain that was rolled over.

Relevant legislative provisions

Income Tax Assessment Act 1997 subsection 104-185(1)

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

Income Tax Assessment Act 1997 Subdivision 152-A

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, and that it be an active asset of yours, 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.

You disposed of your business during the 2012-13 financial year. The two year limit in which to find a replacement consequently expired during the 2014-15 financial year.

During this period, you have been trying to finalise your new business venture. Due to delays with your new premises, you have been unable to begin a lease on your new premises. However, the building has now commenced construction and a lease has been signed.

In determining if the discretion would be exercised the Commissioner has considered the following factors:

Having considered the relevant facts, the Commissioner is able to apply his discretion under subsection 104-190(2) of the ITAA 1997 and allow an extension of time until XX/XX/XXXX.

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).