Edited version of private advice

Authorisation Number: 1051777202422

Date of advice: 1 December 2020

Ruling

Subject: Extension of time to access the small business capital gains tax (CGT) rollover exemption

Question

Will the Commissioner exercise his discretion under subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the replacement asset period 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 will exercise his discretion under subsection 104-190(2) of the ITAA 1997 and allow an extension of time until XX/XX/XXXX.

Further information on the relevant factors of small business CGT Rollover generally can be found on our website ato.gov.au and entering Quick Code QC52291 into the search bar at the top right of the page.

Note: We have limited our ruling to the question raised in your application being whether an extension of time will be granted. You advised that the entity is entitled to the small business CGT concessions, the Commissioner has not considered whether the entity satisfies all the requirements of the small business CGT concessions. More information about the concessions can be found by searching Quick Code QC 22165 on ato.gov.au

This ruling applies for the following periods:

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commences on:

22 August 20XX

Relevant facts and circumstances

The Trustee for the Trust entered into a contract on XX/XX/XXXX to sell their business.

The Trust's previous business was in the XXX industry and the business sale included a restraint for the industry in WA.

The trustee applied subdivision 152-E s152-400 and intended to acquire a replacement active asset within the two year period.

In XX/XX/XXXX due diligence was undertaken on another business however due to several concerns around viability the business purchase did not proceed.

The trustee continued to look for a suitable business in WA but over the next X months did not find anything.

Subsequently, the trustee decided that the most favourable business acquisition would be in the XXX industry and as they were restrained in State A they decided to relocate to State B to pursue a business purchase on the east coast of Australia.

This relocation occurred in XX/XX/XXXX. The trustee met with several laundromat businesses in State B and State C and was in discussions about possible business purchases when the impacts of Covid-19 began.

Consequently, the discussions stopped as the potential businesses that were being considered ceased trading and at that stage the future of the business was unknown.

After the initial lockdowns were relaxed around XX/XX/XXXX, the trustee then recommenced their discussions with these businesses however most had decided that they were no longer in a position to sell.

The trustee then expanded their business acquisition search to a wider range of industries and locations and were in discussions regarding a possible business purchase back in State A in XX/XX/XXXX when the second wave of Covid-19 impacted State B.

The trustee was in full stage three lockdown and unable to leave their home or easily travel to State A to continue the business acquisition discussions.

Relevant legislative provisions

Income Tax Assessment Act 1997 subsection 109-190(2)

Income Tax Assessment Act 1997 section 152-400