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Edited version of private advice
Authorisation Number: 1052051388337
Date of advice: 28 October 2022
Ruling
Subject: Extension of time - small business 15-year exemption
Question 1
Will the Commissioner extend the time period under subsection 152-125(4) of the Income Tax Assessment Act 1997 ('ITAA 1997') to XX/XX/XY for payments of the CGT exempt amount to be made to the CGT concession stakeholders?
Answer
Yes.
You have provided an acceptable explanation for the period of extension requested. It does not appear that there would be any prejudice to the Commissioner in allowing the extension. There would be no unsettling of people or unfairness to people in like positions or the wider public. There does not appear to be any mischief involved. It would be fair and equitable to allow an extension of time.
Accordingly, the Commissioner will allow an extension of the time period to XX/XX/XY.
This ruling applies for the following period:
Year ending 30 June 20XY
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The Company operated in the spare parts business. It was a CGT small business entity.
The Company operated its business at the Property. The Company used the Property wholly for a business purpose. The Company owned the Property for more than 15 years and it was an active asset.
In XXXX, the Liquidator was appointed by court order to wind up the Company.
The Property was sold on XX/XX/XX for $X,XXX,XXX.
The Company satisfies the requirements of the 15 Year Exemption under Subdivision 152-B of the ITAA 1997 in relation to the sale of Property and it can choose to disregard any capital gain made in relation to the disposal of the Property.
The Liquidator could not make a payment to shareholders prior to seeking clarity from the Commissioner on the tax outcome due to the uncertain surplus to be distributed.
The Liquidator can only make a distribution with the court's special leave. Once the private ruling was issued and the tax outcome clarified, the Liquidator sought to apply to the court to make payments to the CGT concession stakeholders of the Company.
The time period for the Company to make payments under paragraph 152-125(1)(b) of the ITAA 1997 ended on XX/XX/XX. There was insufficient time for the Liquidator to receive approval from the court prior to XX/XX/XX.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subdivision 152-B
Income Tax Assessment Act 1997 paragraph 152-125(1)(b)
Income Tax Assessment Act 1997 subsection 152-125(4)