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Edited version of private advice
Authorisation Number: 1051797334225
Date of advice: 18 January 2021
Ruling
Subject: Extension of time to purchase a replacement asset
Question
Will the Commissioner exercise the discretion under section 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the replacement asset period in respect of the small business capital gains tax (CGT) replacement asset roll-over relief to DD MM YYYY?
Answer
Yes. Having considered the relevant facts, the Commissioner will apply the discretion under subsection 104-190(2) of the ITAA 1997 and allow an extension of the time to 31 December 2021 to acquire a replacement asset.
This ruling applies for the following periods:
Year ending DD MM YYYY
The scheme commences on:
DD MM YYYY
Relevant facts and circumstances
You sold your business. As part of the sale, you disposed of your interests in the property.
You made a capital gain.
You were eligible to apply the 50% capital gains discount along with the small business active asset reduction to the sale of the property. You then decided to apply the small business rollover under subdivision 152-E of the Income Tax Assessment Act 1997 to the capital gain with the intention of purchasing a replacement asset.
You entered into an agreement to purchase a retail hardware business, purchased as a going concern subject to due diligence and finance approval.
Delays were incurred satisfying the finance conditions, particularly satisfying the bank's separate due diligence and valuation requirements. The Vendors decided, after the offer lapsed on time, that they would instead accept a cash offer from another buyer to purchase the business. Consequently, you were unable to acquire the business.
You have since been looking for another replacement business asset, engaging a business broker and agencies (and using their newsletters), and looking in local and state newspapers and on agent websites.
You were issued a Notice of Decision, whereby the Commissioner exercised the discretion to extend the asset replacement period.
Difficulties have been encountered due to the limited opportunities in XYZ, which is a geographically remote region and since DD MM YYYY, COVID-19 has further limited those opportunities. To date, nothing suitable has presented.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 104-190
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