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Edited version of your written advice
Authorisation Number: 1051387001551
Date of advice: 20 June 2018
Ruling
Subject: Compulsory acquisition rollover
Question
Are you entitled to apply the replacement asset roll-over rollover in subdivision 124-B of the Income Tax Assessment Act 1997 (ITAA 1997) for compulsory acquisitions?
Answer
Yes.
Having considered your circumstances and the relevant factors, you are eligible for the replacement asset roll-over in Subdivision 124-B of the ITAA 1997 relating to compulsory acquisitions. Consequently, the capital gain or loss can be deferred until a later CGT event occurs.
Further information on involuntary disposals of CGT assets can be found on our website ato.gov.au and entering Quick Code QC 17204 into the search bar at the top right of the page.
This ruling applies for the following period:
Year ended 30 June 20xx
The scheme commences on:
1 July 20xx
Relevant facts and circumstances
You owned a rental unit.
In December 2015 the New South Wales (NSW) Government passed the Strata Schemes Development Act 2015 (the Act). In particular, Strata Renewal (Part 10 of the Development Act) contains the provision that results in the minority unit holders being compulsorily acquired under the strata renewal plan.
The Act introduces a process whereby 75% of lot owners in a freehold strata scheme can agree to end their strata scheme, so that the site can be redeveloped or sold.
Over 75% of the unit owners decided to sell their units to a property developer and the developer forced all the remaining unit owners to sell.
You were in the remaining 25% as you had no plans or intentions of selling the rental property.
Because of the State Government Strata Legislation you had no choice other than to sell the unit.
You received a sum of money for the sale of the unit.
You acquired replacement rental properties within 12 months of the sale of your original unit.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 124-70
Income Tax Assessment Act 1997 section 124-75
Income Tax Assessment Act 1997 section 124-85