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Edited version of private advice
Authorisation Number: 1051923142988
Date of advice: 24 November 2021
Ruling
Subject: Small business retirement exemption - extension of time
Question
Will the Commissioner exercise his discretion under paragraph 103-25(1)(b) of the Income Tax Assessment Act 1997 to extend the timeframe to make a choice to apply the retirement exemption under section 152-305 of the ITAA 1997 to XX/XX/XXXX.
Answer
Yes. A taxpayer who has considered the application of the small business capital gains tax (CGT) concessions and chosen a particular concession has made a choice which cannot later be changed. However, a taxpayer who did not consider the small business CGT concessions has not made a choice and can, if the Commissioner allows further time, later make a choice for a small business CGT concession and amend their return.
In your circumstances, the Commissioner considers that you have not made a choice, and as such, will allow you further time to apply the small business retirement exemption.
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commences on:
1 July 2020
Relevant facts and circumstances
You acquired a Property in 20XX 20XX. During your ownership period the Property was used in a business operated by a company connected with you.
A standard sale contract was entered into with respect to the Property on XX/XX/20XX with a 3 year settlement period.
You were not aware that a capital gains tax (CGT) event was triggered by executing the sale in the 20XX financial year. The contract had not yet settled at the time of lodging your tax return for the 20XX financial year. You had not advised your tax agent of the sale as part of the tax return preparation process. As such, no capital gain was reported in your 20XX tax return. You had not considered the application of the small business CGT concessions.
In 20XX, you sought tax advice on the capital gains tax consequences of the sale of the Property, including advice on the application of the small business CGT concessions.
It was at this time that you were first advised that a CGT Event had occurred in the 20XX income year.
You seek the Commissioner's discretion to allow an extension of time to apply the small business retirement exemption.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 104-10
Income Tax Assessment Act 1997 Section 103-23
Income Tax Assessment Act 1997 Division 152
Income Tax Assessment Act 1997 Section 152-305