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Edited version of your written advice
Authorisation Number: 1051392242291
Date of advice: 3 July 2018
Subject: Small business capital gains tax concessions
Question
Will the Commissioner allow further time under paragraph 103-25(1)(b) of the Income Tax Assessment Act 1997 (ITAA 1997) to make a choice to apply the small business retirement exemption to the capital gains that arose in the year ended 30 June 20XX?
Answer
Yes.
This ruling applies for the following periods:
Year ended 30 June 20XX.
Year ending 30 June 20XX.
The scheme commences on:
1 July 20XX.
Relevant facts and circumstances
In the 20XX year, a number of entities made capital gains.
The small business rollover was chosen in the relevant income year.
By the end of the replacement asset period, CGT event J5 occurred.
Person A is a CGT concession stakeholder in relation to the entities.
The entities lodged their returns for the year in which CGT J5 occurred without making a valid choice to utilise the retirement exemption.
The Trusts were not required to lodge until a later date; however these lodgements were made earlier because of an inadvertent error.
After the returns were incorrectly lodged early, the CGT exempt amounts in relation to the retirement exemption for Person A were specified.
Prior to the required lodgement date, the CGT exempt amounts in relation to Person A were specified in writing.
The entities made their respective payments within seven days of the written notice.
Relevant legislative provisions
Income Tax Assessment Act 1997 paragraph 103-25(1)(b)
Income Tax Assessment Act 1997 Section 152-315
Income Tax Assessment Act 1997 Section 152-325
Income Tax Assessment Act 1997 Subdivision 152-E
Income Tax Assessment Act 1997 Division 152
Reasons for decision
The relevant entities did not make a valid choice in relation to the retirement exemption at the time the relevant returns were lodged. Having considered the facts, it is reasonable to grant a short extension of time to make a choice to utilise the small business CGT concessions.
Further information
We have limited our ruling to the question raised in your application. There may be related issues that you should consider including:
● A capital gain from CGT event J5 may be eligible for the retirement exemption if you meet the relevant conditions. You don't need to meet the basic conditions again but you must meet the retirement exemption conditions. However you cannot apply the 50% discount, small business 50% active asset reduction or the 15 year exemption to reduce this gain.
● In your request you have indicated that you qualify for the relevant small business CGT concessions. The Commissioner has not considered your eligibility for the small business CGT concessions in this ruling. You should ensure that you satisfy the basic conditions and any other relevant conditions. More information is available in the publication Capital gains tax concessions for small business, which is available on our website www.ato.gov.au.