Private ruling: CGT - small business concessions - replacement asset - extension of time
Published: March 2015
Ruling period: Year ending 30 June 2015
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise his discretion under subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the replacement asset period to March 20XX? | A1: Yes

Relevant facts and circumstances: In the 20XX-XX financial year you elected to use the small business rollover to defer capital gains that you made. The date of the CGT event that was rolled over was 20XX. During the two year rollover period, you actively searched for a replacement asset and you inspected assets that were for sale. In 20XX, you attended and bid on an asset, however you were outbid at that time. In 20XX you were in negotiations for the purchase of an asset, however negotiations ceased after the vendor increased the asking price. In 20XX, you signed a contract for the purchase of an asset. You have requested an extension to the replacement period of 30 days to 20XX.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 104-190(2)

Reasons for decision: Summary: In order to apply the small business rollover, a replacement asset must be acquired within two years after the relevant CGT event. However the Commissioner may extend the replacement asset period in certain circumstances (subsection 104-190(2) of the ITAA 1997). The relevant factors in determining whether to extend the replacement asset period are: • there should be evidence of an acceptable explanation for the period of extension requested and that it would be fair and equitable in the circumstances to provide such an extension • account must be had to any prejudice to the Commissioner which may result from the additional time being allowed, however the mere absence of prejudice is not enough to justify the granting of an extension • account must be had of any unsettling of people, other than the Commissioner, or of established practices • there must be a consideration of fairness to people in like positions and the wider public interest • whether there is any mischief involved • a consideration of the consequences. You rolled over capital gains under the small business rollover during the 20XX-XX financial year. You have been unable to acquire a suitable replacement asset within the replacement period. However, you currently have an asset under contract to purchase. The contract date fell outside the replacement period by XX days. Having considered the relevant factors above, and the particular circumstances of your case, the Commissioner has applied his discretion and will extend the asset replacement period by 30 days to 20XX. | Detailed Reasoning - Further issues for you to consider: This ruling has not considered your eligibility for the small business rollover. You should ensure that you satisfied the basic conditions and the other conditions relevant for the rollover. More information is available in the publication Advanced guide to capital gains tax concessions for small business 2013-14 (NAT 3359), which is available on our website www.ato.gov.au .