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This edited version has been archived due to the length of time since original publication.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: 1012989190621

Date of advice: 24 March 2016

Ruling

Subject: CGT - SBC - extension of time for a replacement asset

Question

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

Answer

Yes.

This ruling applies for the following periods:

Year ended 30 June 2014

Year ended 30 June 2015

Year ending 30 June 2016

Year ending 30 June 2017

The scheme commences on:

1 July 2013

Relevant facts and circumstances

You made a capital gain and elected to take advantage of the small business rollover.

You have started a new business, following a six month business research and strategy phase, after the sale of your previous business.

You require additional time to review your business to ascertain what funds or capital commitment would be required.

Relevant legislative provisions

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

Reasons for decision

In order to apply the small business rollover, a replacement asset must be acquired within two years after the relevant CGT event. However the Commissioner may extend the replacement asset period in certain circumstances (subsection 104-190(2) of the Income Tax Assessment Act 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.

You disposed of your business. You have since established a new business however you have been unable to fully review the new business to ascertain what funds or capital commitment will be needed. We consider that you have made ongoing efforts to acquire a replacement asset.

Having considered the relevant factors above, and the particular circumstances of your case, the Commissioner has applied his discretion and will extend the asset replacement period.