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Edited version of private advice
Authorisation Number: 1051949494298
Date of advice: 14 February 2022
Ruling
Subject: CGT - small business concessions - rollover - EOT
Question
Will the Commissioner exercise discretion to provide additional time until 30 June 20XX to acquire a replacement asset under paragraph 124-75(3)(b) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes. Having considered the facts and the relevant circumstances, the Commissioner will exercise discretion under paragraph 124-75(3)(b) of the ITAA 1997 and grant you until 30 June 20XX to acquire another CGT asset.
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commences on:
XX Month 20XX
Relevant facts and circumstances
The CGT asset was destroyed in an accidental fire.
The asset in question is custom made and requires the importation of specific materials.
On XX Month 20XX, an insurance claim for the asset was filed.
On XX Month 20XX, the insurance company signed off on the claim and paid proceeds to replace the asset.
Upon receiving the funds, the taxpayer commenced internal discussions regarding the replacement of the asset.
From July - Month 20XX, the taxpayer was involved in a large project that resulted in significant losses and damages.
From Month 20XX - Month 20XX, senior management and directors travelled interstate to resolve legal issues and were impacted by state government border restrictions in response to COVID-19.
In Month 20XX, the taxpayer experienced a downturn in contractual work and JobKeeper payments were claimed for Month and Month 20XX.
In Month 20XX, the above legal issues contributed to a shareholder dispute. Financial advice provided by the taxpayer's financier indicated that certainty over the cash required to fund a potential shareholder exit was needed before committing additional monies for the replacement asset.
In the 20XX-20XX income year, the taxpayer has been significantly impacted by material supply issues and price increases in steel, aluminium, and insulated panels as a result of sudden growth in the construction industry. This has resulted in focusing all available resources on sourcing construction materials and labour.
The taxpayer expects to overcome supply chain issues and acquire a replacement asset by 30 June 20XX.
Relevant legislative provisions
Income Tax Assessment Act 1997 subsection 104-190(2)
Income Tax Assessment Act 1997 section 104-20
Income Tax Assessment Act 1997 subdivision 124-B
Income Tax Assessment Act 1997 section 124-75
Income Tax Assessment Act 1997 paragraph 124-75(3)(b)