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Edited version of your written advice
Authorisation Number: 1051405915127
Date of advice: 26 July 2018
Ruling
Subject: Commissioner’s discretion
Question
Will the Commissioner exercise his discretion under section 40-365 of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the time limit for a replacement asset to be acquired?
Answer
Yes.
Having considered your circumstances and the relevant factors, the Commissioner is able to apply his discretion under section 40-365 of the ITAA 1997 and allow an extension of time. Further information on what happens when you stop holding a depreciating asset can be found on our website ato.gov.au and entering Quick Code QC 48118 into the search bar at the top right of the page.
This ruling applies for the following periods:
Year ended 30 June 20xx
Year ended 30 June 20xx
Year ended 30 June 20xx
The scheme commences on:
1 July 20xx
Relevant facts and circumstances
You owned a business.
Your business premises burnt to the ground and all plant and equipment was destroyed.
You received an insurance payout, which resulted in an assessable balancing charge.
You applied the balancing charge offset for the involuntary disposal of assets.
You cleared the land as soon as practical after the fire and immediately started planning for rebuilding the premises.
You experienced delays in getting the planning application approved and experienced issues with council regulations and construction delays.
You have provided a number of reasons why the plant and equipment can’t be acquired until the building is completed including:
● It is bulky so it will be difficult and costly to store and move
● Some of the items have to be commissioned into the building which makes it difficult to buy the items before the building is finished
● You will still need to incur servicing and insurance costs while the items sit idle
● The warranty period would start to run even though the items are sitting idle
● There may be newer and improved models available when the building is completed
Relevant legislative provisions
Income Tax Assessment Act 1997 section 40-365