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Edited version of your written advice
Authorisation Number: 1012922092264
Date of advice: 8 December 2015
Ruling
Subject: Capital gains tax -small business concession stakeholders
Question:
Will the Commissioner exercise his discretion contained in subsection 152-125(4) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the 2 year time limit that would ordinarily apply to payments from the entity to its CGT concession stakeholders to a period of X years and X months in order to accommodate the extended finance arrangement granted by the entity to the purchaser?
Answer:
Yes.
This ruling applies for the following period:
Year ended 30 June 2013
The scheme commences on:
1 July 2012
Relevant facts and circumstances
The entity was issued with a private ruling decision and the following was included in the ruling:
Under the sale agreement, entity agreed to lend back to the purchaser the sum of $XX from the sale proceeds. The $XX was withheld from the sale proceeds at settlement for these purposes. The loan is for a period of X years.
The entity received a payment from the purchaser as the period for the original loan expired.
The purchaser requested a further X period in which to repay the remaining balance of the loan to the company.
The company and the purchaser agreed to extend the term of the loan for a further X period, at which time the purchaser is to pay the remaining balance of the loan to the entity.
The company will not be in a position as a result of the extension to the loan to make payments to its CGT concession stakeholders of the full exempt amount before the expiry of original loan period
Relevant legislative provision
Income Tax Assessment Act 1997 - subsection 152-125(4)
Reasons for decision
The Commissioner may exercise his discretion under section 152-125(4) of the ITAA 1997 and allow further time to make payments to the concessional stakeholder. Factors to be considered include:
• there should be evidence of an acceptable explanation for the period of time requested and 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;
• account must be had of any unsettling of people, other than the Commissioner, or of established practices;
• there must be consideration of fairness between you and other people in like positions and the wider public interest;
• whether there was any mischief involved; and
• consideration of the consequences.
Having considered the relevant facts and the entity request, the Commissioner is able to apply his discretion under subsection 152-125(4) of the ITAA 1997 and allow an extension to the two year time limit to a period of X years and X months.