Edited version of private advice

Authorisation Number: 1051734333293

Date of advice: 6 August 2020

Ruling

Subject: Commissioner's discretion for an extension of time to make a choice

Question

Will the Commissioner exercise his discretion in paragraph 103-25(1)(b) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow an extension of time to make a choice under subsection 104-165(2) of the ITAA 1997?

Answer

Yes

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You departed Australia in 20xx with the intention of living overseas for a year or two.

You were a resident of Australia for taxation purposes and owned shares in several Australian companies at the time of departing Australia.

You ceased to be an Australian resident from departure date.

You returned to Australia and renewed your resident status after several years.

You lodged your income tax returns after returning to Australia

The shares you owned were not taken to have been disposed of in 20xx when you ceased being an Australian resident and capital gains were not included in the tax return.

At the time the returns were prepared, your previous tax agent believed that the choice was no longer available as you renewed your Australian resident status and the shares were still held.

Your 20xx return was lodged and notice of assessment was issued.

You are seeking the Commissioners discretion to extend the time so that you can include capital gains from the deemed disposal of shares in your tax return.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 104-160

Income Tax Assessment Act 1997 section 104-165

Income Tax Assessment Act 1997 Paragraph 103-25(1)(b)

Reasons for decision

The general rule is that a choice available under the CGT provisions once made cannot be changed and such a choice must be made by the time the income tax return is lodged or within such further time as the Commissioner allows as described in subsection 103-25(1) of the ITAA 1997.

In determining whether the Commissioner should allow an extension of time the following factors will be considered:

·         there should be evidence of an acceptable explanation for the period of time 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 between the taxpayer and other people in like positions and the wider public interest;

·         whether there was any mischief involved; and

·         a consideration of the consequences.

Your 20xx income tax return was originally lodged without including capital gains from the deemed disposal of shares. You were advised by your previous tax agent that the choice was no longer available as you renewed your Australian resident status and the shares were still held.

It was brought to your attention by your current tax agent that you could upon application to the Commissioner and you have now made a request for consideration by the Commissioner to allow an extension of time to make a choice.

If additional time is allowed, there would be no prejudice to the Commissioner, nor would there be any unsettling of people or of established practices. Anyone in a similar position would be able to request a similar extension and there was no mischief involved in the request. The consequence of allowing further time is that you include capital gains from the deemed disposal of shares in your tax return.

Having regard to all the circumstances, it is considered reasonable for the Commissioner to allow you further time to make a choice regarding subsection 104-165(2) of the ITAA 1997.

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