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Edited version of private advice
Authorisation Number: 1051786704493
Date of advice: 4 December 2020
Ruling
Subject: Capital gains tax destruction of a capital asset and extension of time
Question
Will the Commissioner exercise his discretion under paragraph 124-75(3)(b) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow the Taxpayer further time, until 30 June 20XX, to acquire a replacement asset?
Answer
Yes.
The Commissioner will exercise his discretion under paragraph 124-75(3)(b) of the ITAA 1997 to allow the Taxpayer until 30 June 20XX to replace the destroyed asset.
Further information on the CGT treatment of Involuntary Disposal of CGT assets can be found on our website: ato.gov.au by searching quick code QC17204.
Note: We have limited our ruling to the question raised in your application being whether an extension of time will be granted.
This ruling applies for the following periods:
30 June 20XX
30 June 20XX
30 June 20XX
30 June 20XX
30 June 20XX
30 June 20XX
30 June 20XX
30 June 20XX
The scheme commences on:
May 20XX
Relevant facts and circumstances
The Trust owned a building in which a related party conducted its business.
In XX/XX/XXXX the building was severely damaged by fire which caused the XXX to shut down until repairs could be made.
The insurance process took longer than expected due to a dispute with the policy and proceeds of $X were not paid out until XX/XX/XXXX.
The Trust would now like to restore the building, however they would like some further time to determine the effect of Covid-19 on the industry.
Further, as the building was XXX listed it is anticipated that:
• there may be delays and disruptions caused by Covid-19 to architects, building and construction companies and various suppliers of necessary equipment that would be required to restore the building;
• as it is XXX listed building there are specific skill sets required to perform various tasks which may be hard to source;
• appropriate approvals will also need to be obtained by various councils which can be complicated and time consuming.
Relevant legislative provisions
Income Tax Assessment Act 1997 paragraph 124-75(3)(b)
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