Edited version of private advice

Authorisation Number: 1052304343564

Date of advice: 13 September 2024

Ruling

Subject: CGT - small business concessions

Question

Will the Commissioner exercise discretion under subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow an extension of the replacement asset period until XX June 20XX.

Answer

Yes, the Commissioner will exercise discretion under subsection 104-190(2) of the ITAA 1997 and extend the replacement asset period until XX June 20XX.

This ruling applies for the following period:

1 July 20XX to 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You were a partner in a partnership.

You entered a contract to sell an asset on XX November 20XX.

The asset was owned equally in the partnership.

The asset was used by the partnership to conduct a primary production business.

You chose to apply the small business CGT rollover concession to the capital gain made.

The rollover period ends on XX November 20XX.

Since the sale of the asset, you have been actively looking to purchase a new property.

The windup process for your partnership was completed in August 20XX, at which time you received a cash settlement. Prior to this you did not have the financial capital required to purchase a replacement asset.

You have engaged several real estate agents to assist in acquiring a replacement asset.

You have inspected several properties; however, you have been unsuccessful in acquiring those properties.

You have been unsuccessful in acquiring a replacement asset.

You continue to actively pursue the purchase of a replacement asset.

You currently have expressions of interest for other suitable properties.

You have arranged another property if your expressions of interest are unsuccessful.

You have been in contact with several real estate agents who have advised that they will contact you with any properties that come to market and are within his financial capacity.

Relevant legislative provisions

Income Tax Assessment Act 1997 subsection 104-190(1A).

Income Tax Assessment Act 1997 subdivision 152-E.

Income Tax Assessment Act 1997 subsection 104-190(2).

Reasons for decision

Under section 152-410 of the ITAA 1997, you can choose to obtain a roll over even if you have not yet acquired a replacement asset.

You have attempted to acquire a replacement asset within the 2-year period, ending XX November 20XX.

Subsection 104-190(1A) of the ITAA 1997 outlines the replacement asset period for small business roll-overs under subdivision 152-E of the ITAA 1997. The replacement asset period starts one year before the last CGT event and ends 2 years after that CGT event.

The Commissioner has the discretion to extend the replacement asset period as per subsection 104-190(2) of the ITAA 1997.

Since you received the case settlement from the windup process for your partnership, you have been actively looking to purchase a replacement asset. You have not yet acquired a replacement asset.

You continue to actively pursue the purchase of a replacement asset and have placed expressions of interests on several properties.

You have also made arrangements to pursue another property if your expression of interests are unsuccessful.

The circumstances of the case and explanation for the delay support an extension of the time limit until the XX November 20XX.