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This edited version has been archived due to the length of time since original publication.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.

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Edited version of your written advice

Authorisation Number: 1012768776898

Ruling

Subject: Capital gains tax

Question

Will the Commissioner exercise his discretion under subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the beginning of the replacement asset period to the date you acquired the new property?

Answer

Yes.

This ruling applies for the following period

Year ended 30 June 2014

The scheme commences on

1 July 2013

Relevant facts and circumstances

You owned a farming property.

The property was an active asset.

You decided to purchase a replacement farming property and then sell the original property.

You and your sibling signed an offer and acceptance on the new property in the relevant financial year.

The original property was then put on the market in the relevant financial year.

As the property did not sell it was then listed with another agent.

In the subsequent year you finally received an offer to purchase the property. The offer was accepted in the subsequent financial year.

Relevant legislative provisions

Income Tax Assessment Act 1997 subsection 104-190(2)

Reasons for decision

Where a taxpayer elects to take advantage of the small business rollover, there are rollover conditions that must be satisfied by the end of the replacement asset period. This period starts one year before and ends two years after the last CGT event that occurs in the income year for which you choose the roll over, or a longer period that the Commissioner allows.

You acquired the new property in the relevant financial year. This acquisition occurred outside of the replacement asset period. However the Commissioner may extend the replacement asset period in certain circumstances (subsection 104-190(2) of the ITAA 1997).

The relevant factors in determining whether to extend the replacement asset period are:

    • 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

    • a consideration of the consequences.

We consider that you have provided an acceptable explanation for the delay is disposing of the property. We do not consider that extending the asset replacement period would unsettle others or that any mischief is involved.

Accordingly, the Commissioner will exercise his discretion to allow an extension to the beginning of the replacement asset period to the acquisition date of the new property.