Edited version of private advice

Authorisation Number: 1051585637533

Date of advice: 24 September 2019

Ruling

Subject: Commissioner's discretion for an extension of time to apply the small business rollover

Question

Will the Commissioner use his discretion to extend the replacement asset period pursuant to subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) in respect of the small business capital gains tax (CGT) replacement asset roll-over relief?

Answer

Yes.

Having considered your circumstances and the relevant factors the Commissioner considers it appropriate to grant an extension of the replacement asset period.

Further information can be found by searching Quick Code 'QC 52291' on ato.gov.au.

This ruling applies for the following periods:

Income year ending 30 June 20XX

Income year ending 30 June 20XX

Income year ending 30 June 20XX

Income year ending 30 June 20XX

Income year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You jointly owned a property which consisted of a number of lots, collectively referred to as the Property.

You operated a partnership which conducted its primary production business on the Property.

You entered into contracts to sell the Property with settlement on the contracts occurring after a number of months.

You made a capital gain on the sale of your ownership interests in the Property and included a capital gains tax amount in your assessments. You satisfied the conditions contained in Division 152 of ITAA 1997 and rolled over the capital gain made on the sale of the Property.

You amended your assessments to reduce the amount of capital gain included in your assessment.

You engaged the services of a property agent around the time you entered into the sale contracts to assist you with the purchase of a replacement farming and grazing property.

You have been actively seeking to purchase a replacement asset within the two year period from the date the contract of sale was entered into without success at this point.

A representative of the property agent provided a letter which includes the following information:

·         it became clear quite early in their engagement that the type of property being sought was not available for sale at that time;

·         their investigations supported that due to the deteriorating seasonal condition due to the extreme drought that many landholders considering selling their properties were holding onto their properties until the drought had ended and more optimistic market conditions existed;

·         they had undertaken exhaustive consultation with other selling agents who had reinforced their investigations;

·         in most agent's opinion, there will be more suitable properties coming onto the market following decent rainfalls and that suitable options were virtually non-existent; and

·         the options they are seeking including price, property type, locality, etc. are broad ranging but nothing viable is on the market at present and it is their opinion that will change when the seasons improve.

It is anticipated that you will not be able to purchase a replacement property within the two year period from the date when the contract of sale was entered into.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 104-190

Income Tax Assessment Act 1997 Subsection 104-197(2)

Income Tax Assessment Act 1997 Subdivision 152-E