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Edited version of your written advice
Authorisation Number: 1012735353201
Ruling
Subject: CGT roll-over for asset compulsorily acquired
Question
Will the Commissioner grant you an extension of time until 12 November 2015 under subsection 124-75(3) of the Income Tax Assessment Act 1997 (ITAA 1997) to incur expenditure in acquiring a replacement CGT asset?
Answer:
Yes
This ruling applies for the following period:
Year ending 30 June 2015
Year ending 30 June 2016
The scheme commences on:
1 July 2014
Relevant facts and circumstances
You held real estate, which you used as a rental property. It was compulsorily acquired in the 2013-14 financial year. However, you believe the compensation payment is insufficient and have contested the payment.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 124-70
Income Tax Assessment Act 1997 Section 124-75
Reasons for decision
Section 124-70 of the ITAA 1997 provides you may be able to choose a roll-over if a CGT asset (the original asset) you own is compulsorily acquired.
Section 124-75 of the ITAA 1997 provides, if you receive money for the event happening, you can choose to obtain a roll-over if:
(i) you incur expenditure in acquiring a replacement CGT asset no later than one year, or within such further time as the Commissioner allows in special circumstances, after the end of the income year in which the event happens; and
(ii) you use the replacement asset (for a reasonable time after you acquired it) for the same purpose as, or for a similar purpose to, the purpose for which you used the original asset just before the event happened.
Taxation Determination TD 2000/40 explains what are 'special circumstances' for the purposes of subsection 124-75(3) of the ITAA 1997 and provides the following example:
Graeme had a commercial property compulsorily acquired by a State authority. Graeme is having a protracted legal dispute with the authority over the quantum of the compensation. On these facts, we would accept that there are special circumstances to allow further time.
Your case is similar to the example in TD 2000/40. It follows the Commissioner will grant you an extension of time until XXNovember 2015 to incur expenditure in acquiring a replacement CGT asset.