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Edited version of private advice
Authorisation Number: 1051760772855
Date of advice: 28 September 2020
Ruling
Subject: Capital gains tax
Question
Will the Commissioner exercise the discretion under subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the replacement asset period to xxxx?
Answer
Yes.
Having regard to your full circumstances, the Commissioner considers it would be fair and equitable for the purposes of section 104-190(2) of the ITAA 1997 to extend the replacement asset period to xxxx and allow the small business roll-over under Subdivision 152-E of the ITAA 1997. Further information on the small business rollover can be found on by searching 'QC52291' on ato.gov.au.
This ruling applies for the following periods
Year ending 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commenced on
1 July 20XX
Relevant facts
On xxxx, a capital gains tax (CGT) event occurred in relation to the sale of a business by entity A.
The election was made under the small business relief rules to use of the 50% general discount, 50% active asset reduction and the balance of the capital gain would be rolled into a replacement asset.
During the past XX years there has been every intention to purchase another active asset. The final negotiations are currently taking place in relation to the price of the purchase.
Entity A has been in discussions for some time in relation to the purchase. However, the contract was not signed before the XX year period.
Unfortunately the seller has not moved quickly.
The necessary steps have already been taken by entity A in relation to finance ready to complete the loan as soon as the contract is signed. The asset is worth $xxxx which is more than adequate to cover the CGT rollover amount.
Entity A requests an extension of time to allow the relevant matters to be finalised and the purchase of the active asset. COVID-19 has also effected the timeliness of the transaction and the ability for all parties to transact as quickly as possible in 'normal' circumstances.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subdivision 152-E
Income Tax Assessment Act 1997 section 103-25
Income Tax Assessment Act 1997 section 104-185
Income Tax Assessment Act 1997 section 104-190
Income Tax Assessment Act 1997 section 104-197