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Edited version of your private ruling
Authorisation Number: 1012441723571
Ruling
Subject: Request for Extension of Time to Acquire Replacement Asset
Question
Will the Commissioner exercise his discretion to extend the replacement asset period under section 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) by three months from 16 December 2013 until 16 March 2014?
Answer
Yes.
This ruling applies for the following periods:
Year ended 30 June 2012
Year ended 30 June 2013
Year ended 30 June 2014
The scheme commences in:
2011.
Relevant facts and circumstances
The business entity had one shareholder (owner).
A CGT event took place when the business was sold.
The owner undertook an extended overseas holiday following the disposal of the business.
The owner's departure from country A was delayed by several weeks due to severe weather conditions.
While in country B, the owner had his passport, credit cards, cash and other items stolen. This further delayed and interrupted his travel plans.
The owner had stated his intention to purchase a replacement asset following his return to Australia.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 104-10.
Income Tax Assessment Act 1997 Section 104-185.
Income Tax Assessment Act 1997 Section 104-190.
Income Tax Assessment Act 1997 Section 152-410.
Reasons for decision
Under subsection 104-197(1) of the ITAA 1997, CGT event J5 happens if you chose a small business roll-over under subdivision 152-E and have not acquired a replacement asset by the end of the replacement asset period.
Subsection 104-197(5) provides for the replacement asset period to be modified or extended.
The Commissioner may exercise his discretion to extend the replacement asset period, as provided in subsection 104-190(2) of the ITAA 1997.
In determining if the discretion to allow a period longer than 2 years would be exercised, the Commissioner has considered the following factors:
· whether there is evidence of an acceptable explanation for the period of extension requested and whether it would be fair and equitable in the circumstances to provide such an extension
· whether there is any prejudice to the Commissioner if the additional time is allowed, however the mere absence of prejudice is not enough to justify the granting of an extension
· whether there is any unsettling of people, other than the Commissioner, or of established practices
· fairness to people in like positions and the wider public interest
· whether there is any mischief involved, and
· the consequences of the decision.
The delays to the owner's travel plans were factors beyond his control. Weather reports from the time confirmed severe conditions in country A which caused delays to air travel. A police report was provided as evidences of the events that occurred in county B.
On the basis of the reasons given and the evidence provided, it was considered reasonable to grant a three month extension.