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Edited version of private advice
Authorisation Number: 1051817529384
Date of advice: 20 April 2021
Ruling
Subject: Capital gains tax
Question
Can you use choose to use the Capital Gains Tax roll over under Subdivision 124-B of the Income Tax Assessment Act 1997 if you dispose of your property?
Answer
No.
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You have an investment property.
This property is near an educational facility.
The educational facility has council approval for an expansion.
You have been approached by the educational facility for them to acquire your property.
The school has offered to give you another property as consideration for the acquisition of your property.
The other property is marginally higher in value than your current property.
Each party will pay their own costs such as stamp duty and transfer costs.
In your opinion you have no choice than to swap houses as your current house will be devalued if it remains.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subdivision 124-B
Income Tax Assessment Act 1997 section 124-70
Reasons for decision
Section 124-70 of the Income Tax Assessment Act 1997 (ITAA 1997) allows CGT roll-over relief if an asset owned by the taxpayer:
(a) it is compulsorily *acquired by an *Australian government agency;
(aa) it is compulsorily acquired by an entity (other than an Australian government agency or a *foreign government agency) under a power of compulsory acquisition conferred by a law covered under subsection (1A);
A further requirement is that the owner of the original asset must receive money or another CGT asset or both for the CGT event to be eligible for roll-over. On satisfying these conditions, section 124-75 of the ITAA 1997 provides other requirements which must be satisfied if money is received for the event happening.
In your case the educational facility has approached you regarding acquiring your property to enable them to expand.
In consideration for the acquisition of your property they will swap you another property they own.
As previously advised by our office the Commissioner has no discretion in relation to this roll over to enable a circumstance other than what is set out in section 124-70 for the roll over to apply to.
The property is not being compulsorily acquired. You have a choice to sell or not sell. The property is also not being lost or destroyed nor does the transaction relate to mining leases which are other events contained in section 124-70 ITAA 1997.
None of the events mentioned in section 124-70 ITAA 1997 apply to you.
Therefore, you cannot choose to have the rollover apply in your situation.
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