Edited version of your private ruling

Authorisation Number: 1012586180489

Ruling

Subject: CGT small business concessions

Question

Will the Commissioner allow further time as provided in paragraph 103-25(1)(b) of the Income Tax Assessment Act 1997 (ITAA 1997) for you to choose to apply the small business retirement exemption to a capital gain that arose in the 2012-13 financial year?

Answer

Yes.

This ruling applies for the following period:

Year ended 30 June 2013

The scheme commenced on:

1 July 2012

Relevant facts and circumstances

You are over 55 years of age.

You made a capital gain in the 2012-13 financial year as a result of the sale of active assets.

At the time of the capital gains tax (CGT) event, you satisfied the conditions to access the small business concessions in Division 152 of the ITAA 1997.

Your tax return for the 2012-13 financial year has been lodged. It was your intention to make a choice to apply the retirement exemption prior to lodgement.

However, you did not make the choice in writing until after your return was lodged.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subsection 103-25(1)

Reasons for decision

You may choose to disregard all or part of a capital gain under the small business retirement exemption if you satisfy certain conditions.

The general rule is that a choice available under the CGT provisions once made can not be changed. Generally, such a choice must be made by the time the income tax return is lodged, or within such further time as the Commissioner allows (subsection 103-25(1) of the ITAA 1997).

Under subsection 103-25(2) of the ITAA 1997, the way you prepare your income tax return is sufficient evidence of the making of the choice. Paragraph 103-25(3)(b) of the ITAA 1997, however, contains an exception in relation to the small business retirement exemption, as subsection 152-315(4) of the ITAA 1997 requires the choice for this exemption to be made in writing.

In determining if the Commissioner should use his discretion to allow an extension of time the following will be considered:

· there should be 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;

· account must be had to 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;

· account must be had of any unsettling of people, other than the Commissioner, or of established practices;

· there must be a 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.

Application to your circumstances

Taking into account the period of time between the lodgment of your return and the time you made the choice the Commissioner considers that it would be appropriate to exercise the discretion in this case. There would be no prejudice to the Commissioner or unsettling of people by allowing the extension. There is no mischief involved. The Commissioner considers it fair and equitable in these circumstances to exercise his discretion.

An extension of time is allowed for you to make the choice to apply the retirement exemption.