Edited version of private ruling

Authorisation Number: 1011836794330

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Ruling

Subject: Request for extension of time to acquire replacement asset

Question 1

Will the Commissioner extend the replacement asset period under subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) for the taxpayer to choose the small business roll-over in Subdivision 152-E of the ITAA 1997?

Answer

Yes.

This ruling applies for the following period

1 July 2011 to 30 June 2013

The scheme commenced on

July 2011

Relevant facts

Your business has made an election to utilise the small business concession rollover provision allowing up to two years to roll-over the gain into an active business asset.

The two year period ends on 30 June 2011.

You have been unsuccessful in procuring a suitable business to rollover.

Your existing business has undergone major changes and expanding this business is not profitable.

The director of your company is undergoing training at the moment to gain knowledge in the acquiring of assets for rollover provisions.

Your client has been looking at a few transport businesses and they have been found to be unsuitable.

You request an extension of time of two years to acquire the asset from June 2011.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 104-190

Income Tax Assessment Act 1997 Subdivision 152-E

Income Tax Assessment Act 1997 Subdivision 152-A

)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 basic conditions which must be met to obtain relief are set out in Subdivision 152-A of the ITAA 1997.

The conditions that must be met in order to obtain relief under the small business roll-over provisions are set out in Subdivision 152-E of the ITAA 1997. The roll-over allows the small business entity to defer the making of a capital gain from a capital gains tax (CGT) event happening in relation to small business asset, if it acquires replacement assets and certain conditions are satisfied..

Some of the factors to be considered by the Commissioner are as follows:

· evidence of an acceptable explanation for the period of extension requested;

· prejudice to the Commissioner which may result from the additional time being allowed;

· 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.

Section 104-190(2) of the ITAA 1997 gives the ATO a general discretion to extend the time limits in which replacement assets must be acquired.

You have provided sufficient explanation as to the need for an extension to purchase the asset.

Conclusion

Having considered the relevant factors, the Commissioner is able to exercise his discretion under subsection 104-190(2) of the ITAA 1997. The time limit is extended to 30 June 2013.