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Edited version of private advice
Authorisation Number: 1051851828622
Date of advice: 12 June 2021
Ruling
Subject: Compulsory acquisition of a commercial property.
Question
Will the Commissioner exercise his discretion under section 124-75(3)(b) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow an extension of time until DD MM YYYY to acquire a replacement asset?
Answer
Yes. Section 124-75(3)(b) of the ITAA 1997 requires you to incur expenditure in acquiring a replacement CGT asset no later than one year after the CGT event or within such further time as the Commissioner allows in special circumstances.
Based on the facts and circumstances of your case, and the guidance provided in Taxation Determination TD 2000/40 Income tax: capital gains: what are 'special circumstances' for the purposes of subsection 124-75(3) of the Income Tax Assessment Act 1997?, the Commissioner will exercise the discretion to allow an extension of time until 3 DD MM YYYY.
This ruling applies for the following periods:
Year ended DD MM YYYY
The scheme commences on:
DD MM YYYY
Relevant facts and circumstances
You acquired a commercial (the Property).
The property was compulsory acquired by State Government and you made a capital gain.
Due to the compulsory acquisition of the property, a Capital Gain Tax (CGT) event A1 pursuant to section 104-10 of the ITAA 1997 occurred and resulted in a capital gain.
You acquired a replacement asset within the two-year replacement asset period.
On DD MM YYYY, you applied for a private ruling, requesting an extension of the replacement asset period. On DD MM YYYY, you were granted an extension of the replacement asset period until DD MM YYYY.
You have inspected several properties to acquire using the remaining balance of the capital gain however have had difficulty acquiring a replacement asset due to COVID-19 and the economic impact on the acquisition market for commercial properties specifically the decrease in listing, increase in purchase price and due in turn to the lack of supply.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 124-75(3)(b)