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Edited version of private advice
Authorisation Number: 1052000217036
Date of advice: 30 June 2022
Ruling
Subject: CGT - small business concession
Question
Will the Commissioner exercise the discretion pursuant to subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the small business capital gains tax (CGT) replacement asset period to the 20XX/XX financial year?
Answer
Yes. Having considered the relevant factors and your specific circumstances the Commissioner will exercise the discretion pursuant to subsection 104-190(02) of the ITAA 1997 and extend the replacement asset period to the 20XX/XX financial year.
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 acquired an agreement with a franchise whereby you derive income for assisting other franchisees.
You owned and sold the agreement which resulted in a capital gain.
At the time of the sale, you chose to apply the small business roll-over under Subdivision 152-E of the ITAA 1997 which allows you to defer the making of a capital gain from a CGT event happening in relation to one or more small business assets if the basic conditions in Subdivision 152-A are satisfied for the gain.
You determined that you satisfied the base conditions for relief in Subdivision 152-A specifically referring to section 152-10 of the ITAA 1997.
You determined the agreement was an active asset under section 152-40 of the ITAA 1997.
Within the two-year period you attempted to acquire other rights as replacement asset but was unsuccessful due to:
• COVID-19 interstate travel restrictions which prevented you from conducting inspection.
• The economic impact of COVID-19 limited the acquisition market.
• Natural disaster - flooding
• An unexpected change in shareholders.
You have recently identified another possible replacement asset and are currently undertaking the required actions to secure the replacement asset.
Relevant legislative provisions
Income Tax Assessment Act 1997 Division 152
Income Tax Assessment Act 1997 Subdivision 152-A
Income Tax Assessment Act 1997 Subdivision 152-E
Income Tax Assessment Act 1997 section 152-10
Income Tax Assessment Act 1997 section 152-40