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Edited version of private advice
Authorisation Number: 1051684235968
Date of advice: 2 June 2020
Ruling
Subject: Small Business CGT Concessions
Question 1
Does the Commissioner accept that you have not yet made the choice to apply or forgo the small business retirement exemption in subdivision 152-D of the Income Tax Assessment Act 1997 (ITAA 1997)to your remaining capital gain?
Answer
Yes. Having regard to the circumstances of your case, it is considered that you have not yet made the choice to apply or forego the small business retirement exemption in subdivision 152-D of the ITAA 1997.
Question 2
Will the Commissioner exercise his discretion under subsection 104-190(2) of the ITAA 1997 to extend the replacement asset period to XX/XX/XXXX?
Answer
Yes. Having considered the relevant factors, and the particular circumstances of your case, the Commissioner has applied his discretion and will extend the asset replacement period to XX/XX/XXXX.
This ruling applies for the following periods:
Year ended 30 June 20XX to Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
On XX/XX/XXXX, you sold a CGT asset resulting in a capital gain.
You were eligible for and applied the general 50% CGT discount and the small business 50% active asset reduction in Division 152 of the ITAA 1997 in relation to the sale.
You then chose to utilise the small business rollover (subdivision 152-E of the ITAA 1997) to disregard the remaining capital gain.
During the two year replacement asset period you decided that you would spend $XXX,XXX on a replacement asset and place the balance into superannuation in accordance with the small business retirement exemption.
You expended the $XXX,XXX on a replacement asset during the two year replacement asset period however, due to an unexpected extraordinary event, you did not place the balance into your superannuation account as you were unsure as to whether this would ultimately be needed to fund your business needs.
The two year replacement asset period expired during the 20XX-XX income year. Due to an oversight you did not complete the CGT question in your 20XX-XX tax return. That is, you neither declared a capital gain or claimed a CGT concession in your 20XX-XX tax return.
It is not yet known what the full impact of the unexpected extraordinary event will have on your business interests. Once this is known you will know whether you will have to use the balance to purchase additional shares in your related business entity as a replacement asset or you will be able to place it into your superannuation account. You have requested an extention to the replacement asset period.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 103-25
Income Tax Assessment Act 1997 Section 104-190
Income Tax Assessment Act 1997 Division 152 of the ITAA 1997
Income Tax Assessment Act 1997 Subdivision 152-D of the ITAA 1997
Income Tax Assessment Act 1997 Subdivision 152-E of the ITAA 1997