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Edited version of your written advice
Authorisation Number: 1051355670933
Date of advice: 3 April 2018
Ruling
Subject: Small business concession - extension of time
Question:
Will the Commissioner exercise his discretion under subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow an extension to the replacement asset period?
Answer
Yes. The replacement asset period is extended to 30 June 20XX.
This ruling applies for the following periods:
Year ending 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts
You owned a share of a property that carried on a primary production business.
The property was sold in 20XX.
You used the Capital Gains Tax (CGT) general discount and Small Business (SB) active asset reduction the 20XX-XX financial year.
You began searching for a replacement asset.
You engaged the services of various local real estate agents to locate suitable properties.
You made an offer on a property with a condition that the contract be completed by 1 July 20XX.
The vendor unfortunately failed to complete the contact.
You found a suitable property a short time later.
The contract was entered into in 20XX.
Relevant legislative provisions
Section 104-185 Income Tax Assessment Act 1997
Section 104-190 Income Tax Assessment Act 1997
Reasons for decision
The small business roll-over allows you to defer the capital gain made from a Capital Gains Tax (CGT) event if you acquire one or more replacement assets and satisfy certain conditions. The conditions which must be met to obtain relief are set out in Subdivision 152-A of the ITAA 1997.
For you to obtain a roll-over, subsection 104-185(1) of the ITAA 1997 requires you to acquire a replacement asset, and that it be an active asset of yours, within a period starting one year before, and ending two years after the date of disposal of the original asset. Subsection 104-190(2) of the ITAA 1997 states that the Commissioner may exercise his discretion to extend those time limits.
In determining if the discretion would be exercised the Commissioner has considered the following factors:
● evidence of an acceptable explanation for the period of the extension requested (and whether it would be fair and equitable in the circumstances to provide such an extension)
● prejudice to the Commissioner which may result from the additional time being allowed (but the mere absence of prejudice is not enough to justify the granting of an extension)
● unsettling of people, other than the Commissioner, or of established practices
● fairness to people in like positions and the wider public interest
● whether any mischief is involved, and
● consequences of the decision.
Having considered the relevant facts, the Commissioner is able to apply his discretion under subsection 104-190(2) of the ITAA 1997 to allow a reasonable extension to the time limit until 30 June 20XX.