Private ruling: CGT - small business concessions
Published: November 2013
Ruling period: Year ending 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Will the Commissioner exercise the discretion available under section 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to provide you with an extension of time until 30 June 2014 to acquire a replacement asset for the business that you previously owned? | A1: Yes.

Relevant facts and circumstances: You entered into a sale of business agreement with an independent party in Month 20XX. The agreement provided for payment of the sale price by instalments. In Month 20XX there was a dispute and appropriate action was taken under the sale agreement to recover monies. You attended a mediation hearing but an agreement was not reached and you progressed to settle the matter in court. A settlement was achieved before court proceedings commenced and the final payment was received in Month 20XX. In the 20XX income tax return you declared the CGT event and elected to apply the small business rollover concession. You intend on buying a new business and are currently negotiating with partners.

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

Reasons for decision: Summary: The small business roll-over allows you to defer the capital gain made from a capital gains tax event if you acquire one or more replacement assets and satisfy certain conditions. The conditions which must be met to obtain relief are set out in Subdivision 152-A of the ITAA 1997. For you to obtain a roll-over, subsection 104-185(1) of the ITAA 1997 requires you to acquire a replacement asset within a period starting one year before, and ending two years after the date of disposal of the original asset. Subsection 104-190(2) of the ITAA 1997 states that the Commissioner may exercise his discretion to extend those time limits. In determining if the discretion would be exercised the Commissioner has considered the following factors: · 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 · 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 · any unsettling of people, other than the Commissioner, or of established practices · consideration of fairness to people in like positions and the wider public interest · whether there is any mischief involved, and · a consideration of the consequences In your case, you sold your business and agreed to receive the proceeds in instalments. It became evident that you weren't going to receive the total amount agreed upon and you had a dispute with the purchaser regarding the sale price of the business. A settlement was reached and you received the final instalment in Month 20XX. Having considered the relevant facts, the Commissioner is able to apply his discretion under subsection 104-190(2) of the ITAA 1997 and allow an extension to the replacement asset period. Allowing an extension is not prejudicial to the Commissioner in this case nor is it unfair to other people in similar positions.