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Edited version of private advice
Authorisation Number: 1052209879110
Date of advice: 18 January 2024
Ruling
Subject: CGT - extension of time rollover relief
Question
Will the Commissioner exercise the discretion under paragraph 124-75(3)(b) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow an extension of time to DD MM 20YY to acquire a replacement asset?
Answer
Yes. The Commissioner will exercise the discretion under paragraph 124-75(3)(b) of the ITAA 1997 to extend the period for acquiring a replacement asset to DD MM 20YY. The Commissioner considers that:
• The ongoing legal dispute over the compensation amount has delayed settlement and provided uncertainty regarding the final compensation amount.
• One replacement property has been acquired, however until the final compensation amount is determined the amount of additional expenditure required to satisfy the rollover requirements is unable to be determined.
This ruling applies for the following period:
Year ending 30 June 20YY
The scheme commenced on:
1 July 20YY
Relevant facts and circumstances
The taxpayers are spouses.
The taxpayers' purchased land as tenants in common in July 20XX (The Land).
The Land has been the taxpayers' main residence since 20XX.
The Land has also been used for share-farm arrangements.
The Local Council issued a notice of Compulsory Acquisition for part of the Land under the relevant legislation in April 20XX.
Under this notice of compulsory acquisition, an amount of compensation was offered.
The taxpayers' and the Local Council are engaged in an ongoing legal dispute over the compensation amount.
The Taxpayers and the Local Council are currently awaiting an independent valuation of the compulsorily acquired land to resolve the dispute.
The taxpayers have not signed the final deed of settlement.
It is the taxpayers' intention to apply the settlement proceeds to the acquisition of suitable replacement land and apply the CGT roll-over provided for in Subdivision 124-B of the ITAA 1997.
The taxpayers acquired one replacement property.
The taxpayers are experiencing difficulty in searching for a second suitable replacement property due to the uncertainty surrounding the final compensation amount.
The taxpayers' have inspected many replacement properties in preparation and recently made an offer on a piece of land.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 104-10
Income Tax Assessment Act 1997 section 124-70
Income Tax Assessment Act 1997 section 124-75