Edited version of private advice

Authorisation Number: 1051767060490

Date of advice: 14 October 2020

Ruling

Subject: Capital gains tax - compulsory acquisition rollover - replacement asset

Question

Will the replacement asset roll-over apply on the disposal of a compulsorily acquired asset?

Answer

Yes. In this case your circumstances meet the conditions outlined under Subdivision 124-B of the Income Tax Assessment Act 1997. You are eligible to choose a replacement asset rollover as the Capital Gain Tax (CGT) asset was compulsorily acquired by an Australian government agency. You have received money for the compulsorily acquired asset and have incurred expenditure in acquiring replacement asset (or assets) used for the same or similar purpose as the compulsorily acquired asset. The replacement asset roll-over allows you to defer the making of a capital gain or loss from one CGT event until a later CGT event happens. Further information can be found by searching "QC 17204" on ato.gov.au.

This ruling applies for the following periods:

Year ended 30 June 2018

Year ended 30 June 2019

The scheme commences on:

1 July 2017

Relevant facts and circumstances

You acquired an asset in equal shares.

The property was used in carrying on a business.

You received a Notice of Intention for the compulsory acquisition of land.

The asset was compulsorily acquired.

You received a Notice of Acquisition which included the offer of compensation amount inclusive of the estimated market value of the asset.

The acquisition price was agreed to be paid as an undissected Lump Sum payment.

Since the compulsory acquisition, you have begun construction on a property which satisfies the replacement asset requirements.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subdivision 124-B

Income Tax Assessment Act 1997 Paragraph 124-75(3)(b)