Edited version of private advice

Authorisation Number: 1051785011508

Date of advice: 14 December 2020

Ruling

Subject: Capital gains tax

Question

Will the Commissioner exercise his discretion and extend the time for obtaining a replacement asset until mid 20XX?

Answer

Yes.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You own two properties.

Both blocks of land had a dwelling and sheds on them.

One property was rented out and the other was your main residence.

The houses and structures on the two blocks were caught in the bushfires of XXXX.

You have not yet rebuilt the properties and need to do this by mid 20XX.

You stated that the delays in commencing and completing the rebuild has been out of your control.

You stated you have not been responsible for the delays in having the new work started.

There has been a series of difficulties:

•         The blocks were effectively inaccessible until XXX, due to delays re government clean-up for hazards, and burnt bridge.

•         More than 20% of the physical area of the Shire was burned.

•         As a result, there is an ongoing lack of available builders in the district. It is difficult to secure a builder prior to even signing contracts and getting permits to commence the rebuilds.

•         Government restrictions on inter-state travel in relation to Covid-19 made it difficult for you to be on-site with builders, architects, etc, causing further delays in starting the work.

•         Your availability for on-site consultations will also be affected by your need to carry on your income-earning activities, which are not in the same state as the properties as you work in another state.

You had delays dealing with the insurance company.

You had to work out what documentation you had and what had been lost in the fires.

You lost everything in the fire.

You were living in a tent for a period of time until a pod was delivered to the block.

Your mental health has been affected by the events of the fire and then Covid-19 which have all prevented the rebuild.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 124-75(3)

Reasons for decision

To meet the requirements of paragraph 124-75(3) (b) of the Income Tax Assessment Act 1997 (ITAA 1997) the new asset must be acquired on or before 30 June 20XX or within such time as the Commissioner allows in special circumstances.

You are seeking an extension to mid 20XX.

When considering what factors are taken into consideration when allowing an extension of time to purchase a replacement asset the Commissioner considers the following factors:

•         whether there is evidence of an acceptable explanation for the period of extension requested and whether it would be fair and equitable in the circumstances to provide such an extension

•         whether there is any prejudice to the Commissioner if the additional time is allowed, however the mere absence of prejudice is not enough to justify the granting of an extension

•         whether there is any unsettling of people, other than the Commissioner, or of established practices

•         fairness to people in like positions and the wider public interest

•         whether there is any mischief involved and

•         the consequences of the decision.

In considering all of your circumstances the Commissioner will extend the time period for you to obtain a replacement asset to mid 20XX.