| Disclaimer You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private advice
Authorisation Number: 1052180384072
Date of advice: 19 October 2023
Ruling
Subject: CGT - compulsory acquisition rollover
Question
Does the replacement asset rollover provision in Subdivision 124-B of the Income Tax Assessment Act 1997 (ITAA 1997)for compulsory acquisitions apply to the disposal of the Unit?
Answer
Yes. Your circumstances meet the conditions outlined in paragraph 124-70(1)(c) of the ITAA 1997. Therefore, you are eligible to choose the replacement asset rollover in relation to the capital gains tax (CGT) asset. The replacement asset roll-over allows you to defer the making of a capital gain or loss from one CGT event, being CGT event A1 when the property is disposed of, until a later CGT event happens.
You will receive money for the compulsorily acquired property. Under subsection 124-75(2) of the ITAA 1997, the owner of the asset must incur expenditure in acquiring another CGT asset. In accordance with paragraph 124-75(3)(a) of the ITAA 1997, at least some of the expenditure must be incurred no earlier than one year before the event happens, or under paragraph 124-75(3)(b) of the ITAA 1997, no later than one year after the end of the income year in which the event happens, or within such further time as the Commissioner allows in special circumstances.
Further information on involuntary disposals of CGT assets can be found on our website ato.gov.au and entering Quick Code QC 66017 into the search bar at the top right of the page.
This ruling applies for the following periods:
Year ended 30 June 20XX
Year ended 30 June 20XX
The scheme commenced on:
1 July 2023
Relevant facts and circumstances
You are a resident for Australian tax purposes.
You are the registered proprietors of a strata unit (the Unit) and hold the property as joint tenants.
The Unit has not been used by you as a main residence and has been used exclusively to derive rental income throughout the period of ownership.
The Developer sought to acquire two adjoining blocks which included the Unit.
You dissented to a sale to the Developer at which point the Developer commenced action to compulsorily acquire the Unit under the state legislation having secured the required level of support.
You executed a Call Option Deed with the Developer to purchase the Unit for the agreed purchase price.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 124-70
Income Tax Assessment Act 1997 section 124-75
Income Tax Assessment Act 1997 section 124-75