Edited version of private advice

Authorisation Number: 1051901699039

Date of advice: 21 September 2021

Ruling

Subject: CGT - compulsorily acquired asset roll-over - further time

Question 1

Will the Commissioner exercise his discretion pursuant to subsection 124-75(3) of the Income Tax Assessment Act 1997 (ITAA 1997) and allow an extension of time in which to spend the remaining proceeds following the compulsory acquisition of your asset in order to meet the eligibility requirements for a roll-over under Subdivision 124-B of the ITAA 1997?

Answer

Yes

Question 2

Will the Commissioner allow further time until XX XX 20XX for you to acquire a replacement asset?

Answer

Yes

This ruling applies for the following periods:

Year ended 30 June 20XX

Year ended 30 June 20XX

The scheme commences on:

20XX

Relevant facts and circumstances

You had landholdings that were compulsorily acquired.

You appealed the quantum of the compensation offered and the basis upon which it had been calculated. This dispute continued over a lengthy period.

The dispute was ultimately settled, and you received the total compensation payment for the landholdings.

Throughout the proceedings and post settlement of the disputed compensation amount, you have continued to search for suitable properties. As there was uncertainty around the quantum of total compensation, you considered that it was not viable for you to spend the entire amount of compensation while in dispute.

You have been able to use some of the compensation to obtain properties and are continuing to look for further suitable properties.

You have extended your search, given the limited stock and availability of properties which could be suitable replacement assets on the property market due to COVID-19 pandemic.

In addition, during this time the Australian Federal and State Governments imposed restrictions which included the banning of auctions, face-to-face meetings in some circumstances, and inspections.

Relevant legislative provisions

Income Tax Assessment Act 1997, Subsection 124-75(3)

Reasons for decision

Question 1

The restrictions arising from the COVID-19 pandemic have significantly affected your ability to look for a replacement asset, and suitable commercial properties yielding a commercially viable rental return are less available.

Therefore, the Commissioner will exercise his discretion pursuant to subsection 124-75(3) of the ITAA 1997 to allow further time to incur at least some of the expenditure to obtain a replacement asset for landholdings that were compulsorily acquired.

Question 2

Given the ongoing nature of the COVID-19 pandemic and the effect it is having on your ability to find suitable assets, the Commissioner will allow further time until XX XX 20XX for you to incur at least some of the expenditure to obtain a replacement asset.