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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your private ruling

Authorisation Number: 1012579633317

Ruling

Subject: CGT - small business concessions

Question

Will the Commissioner exercise the discretion available under section 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to provide you with an extension of time to acquire a replacement asset for the business that you previously owned?

Answer

Yes.

This ruling applies for the following periods

Year ended 30 June 2014

Year ended 30 June 2015

The scheme commences on

1 July 2013

Relevant facts and circumstances

You held an interest in a business which you sold in 2011.

You elected to defer the capital gain under the small business roll-over concession.

Since selling the interest in the business, the Trustees have been looking for a suitable replacement asset.

Ever since the sale there has been a number of instances where the Trustees have considered and negotiated the purchase of a replacement asset.

There are negotiations currently ongoing.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subsection 104-185(1).

Income Tax Assessment Act 1997 Subsection 104-190(2).

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

For you to obtain a roll-over, subsection 104-185(1) of the ITAA 1997 requires you to acquire a replacement asset, and that it be an active asset of yours, within a period starting one year before, and ending two years after the date of disposal of the original asset. Subsection 104-190(2) of the ITAA 1997 states that the Commissioner may exercise his discretion to extend those time limits.

In determining if the discretion would be exercised the Commissioner has considered the following factors:

    · evidence of an acceptable explanation for the period of extension requested and that it would be fair and equitable in the circumstances to provide such an extension

    · any prejudice to the Commissioner which may result from the additional time being allowed, however the mere absence of prejudice is not enough to justify the granting of an extension

    · any unsettling of people, other than the Commissioner, or of established practices

    · consideration of fairness to people in like positions and the wider public interest

    · whether there is any mischief involved, and

    · a consideration of the consequences

In your case, you have made continuing efforts to obtain a replacement asset, since the sale of your interest in the business. You are currently in negotiations and allowing an extension is not prejudicial to the Commissioner in this case nor is it unfair to other people in similar positions.

Having considered the relevant facts, the Commissioner is able to apply his discretion under subsection 104-190(2) of the ITAA 1997 and allow an extension to the replacement asset period.


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