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Edited version of private advice
Authorisation Number: 1013130550647
Date of advice: 28 November 2016
Ruling
Subject: Small business roll-over - replacement asset extension of time
Question
Will the Commissioner exercise his discretion under subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow an extension to the replacement asset period?
Answer
Yes. Until the period requested
This ruling applies for the following periods:
Year ending 30 June 2016
The scheme commenced on:
1 July 2017
Relevant facts
You and your spouse operated a business.
The business was operated as a partnership.
You and your spouse sold the business in 2015.
You used the Capital Gains Tax (CGT) Small Business (SB) rollover concessions in the 2014-15 financial year.
You have started researching business opportunities and have investigated a new business.
You have approached your local council as formal approval in the form of a licence is required to operate the business.
The local council commenced a formal review 2016.
You have contacted the local council in relation to an expected completion of the review and have been unable to obtain an indication of when the review will be complete.
The local council are not accepting applications for licences until the review is complete.
Once the review is complete, you will determine whether the business is viable. If it is viable you will commence business.
Relevant legislative provisions
Section 104-185 Income Tax Assessment Act 1997
Section 104-190 Income Tax Assessment Act 1997
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.
In determining if the discretion would be exercised the Commissioner has considered the following factors:
- evidence of an acceptable explanation for the period of the extension requested (and whether it would be fair and equitable in the circumstances to provide such an extension)
- prejudice to the Commissioner which may result from the additional time being allowed (but the mere absence of prejudice is not enough to justify the granting of an extension)
- unsettling of people, other than the Commissioner, or of established practices
- fairness to people in like positions and the wider public interest
- whether any mischief is involved, and
- consequences of the decision.
Having considered the relevant facts, the Commissioner is able to apply his discretion under subsection 104-190(2) of the ITAA 1997 to allow a reasonable extension to the time limit until the period requested.
Additional information
This ruling has not considered your eligibility for the small business rollover concession. You should ensure that you satisfy the basic conditions and the other conditions relevant for the concession. More information is available in the publication Advanced guide to capital gains tax concessions for small business 2015-16 (NAT 3359), which is available on our website www.ato.gov.au
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