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Edited version of private advice
Authorisation Number: 1051522491073
Date of advice: 03 June 2019
Ruling
Subject: Small business concessions
Question 1
Will the Commissioner extend the replacement asset period?
Answer
Yes.
Question 2
Does the office qualify as a replacement asset when it becomes the main office of the business after the lease expires?
Answer
Yes.
Having considered the relevant factors against the specific circumstances of your case, the Commissioner will exercise the discretion under subsection 104-190(2) of the Income Tax Assessment Act 1997 to allow an extension to the replacement asset period. Once the office commences to be used in the business of an entity connected to you it will be an active asset and it will qualify as a replacement asset for the purposes of the small business roll-over. Further information can be found by searching 'QC 52291' on ato.gov.au
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 satisfy the basic conditions in relation to the sale of an active asset.
You have chosen the replacement asset roll-over concession, as you want to purchase an office suite to conduct your business from.
The business is operated by an entity connected to you.
You have recently found an office that meets all your criteria as to the price, location and size.
The office would be purchased within the replacement asset period but it is currently subject to a lease between the current owner and a tenant that is unrelated to you in any way. You will inherit the lease agreement and not be able to move into the office until it expires, unless the tenant will agree to terminate the lease earlier.
Immediately after the premises will be vacated, you will conduct necessary renovation to the premises and move the business in immediately after.
Relevant legislative provisions
Income Tax Assessment Act 1997 subsection 104-190(2)
Income Tax Assessment Act 1997 subdivision 152-A