Edited version of private advice

Authorisation Number: 1052228788069

Date of advice: 7 March 2024

Ruling

Subject: CGT - small business concessions

Question

Will the Commissioner allow for an extension to the replacement asset period for the purposes of the small-business replacement asset rollover CGT concession, under subsection 104-190 of the Income Tax Assessment Act 1997 (ITAA 1997).

Answer

Yes. The director's full-time caring responsibilities for their parent have impacted their ability to find a replacement asset for their business. The Commissioner will provide an extension to the replacement asset period to XX of 20XX.

Relevant facts and circumstances

The CGT event occurred on XX 20XX when the client sold their business

The director controls the business and is the sole decision maker

The director elected to apply the small business CGT concession roll-over relief for a replacement asset

The director's parent passed away X of XX 20XX. At approximately the same time, the directors remaining parent suffered a deterioration of their health related to a previously diagnosed illness and required an increased amount of care. The director became the primary carer for their parent.

This increase in amount of care involves the director visiting their parent multiple time a day to administer care. This care includes food shopping, cooking three times a day, regular cleaning of the premises, and administration of their parent's finances. The director has provided a letter from their parent's specialist detailing the level of care that they require.

The director has attempted to find replacement assets, however due to the amount of care that they now provide to their parent, it has become difficult to commit to the required due diligence to find a replacement asset.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 104-190

Income Tax Assessment Act 1997 section 152-410

Reasons for decision

Under subsection 104-190(1A) of the ITAA 1997, the replacement asset period for the small business rollover CGT concession under subdivision 152-E of the ITAA 1997 is two years after the CGT event occurs.

Subsection 104-190(2) of the ITAA 1997 states that the Commissioner may extend the replacement asset period.

Considering that during the replacement asset period, the director could not find a replacement asset due to their parent passing away, and them having to take on full-time caring commitments for their remaining parent, The Commissioner will exercise their discretion and extend the replacement asset period by one year from the end of the replacement asset period.

Further issue for you to consider

This ruling has not considered your eligibility for the small business roll-over concession. You should ensure that you satisfy the basic conditions and the other conditions relevant for the concession. More information can be found at CGT concessions for small business, which is available on our website ato.gov.au