Edited version of private advice

Authorisation Number: 1051970908005

Date of advice: 7 April 2022

Ruling

Subject: CGT - replacement asset

Question

Will the Commissioner exercise his discretion and extend the time for obtaining a replacement asset until 30 June 20XX?

Answer

Yes.

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 30 June 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 30 June 20XX.

This ruling applies for the following period:

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You own a number of blocks of land. The blocks of land had a dwelling and sheds on them. A property was rented out and another was your main residence. The houses and structures on the blocks were caught in bushfires. You have not yet rebuilt the properties.

You stated that the delays in commencing and completing the rebuild have 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 for months, due to delays from government clean-up for hazards, and a burnt bridge.

A sizable percentage of the physical area of local district was burned. A number of homes and commercial facilities as well as numerous outbuildings were destroyed, and many other homes, facilities and outbuildings were damaged.

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. 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.

There are also issues with your contract and the fact that due to the pandemic the cost and availability of materials has increased the price of a rebuild.

This has delayed the rebuild and you are not able to meet the deadline for the extension previously granted by the Commissioner.

You were living in a xxxx for a period of time until a xxxx 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)(b)