Private ruling: CGT - small business concessions - extension of time to replacement asset period
Date of advice: 8 July 2015
Published: July 2015
Ruling period: Year ended 30 June 2014 | Year ended 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 31 October 2014? | A1: Yes

Relevant facts and circumstances: You sold your business in 20XX, which resulted in a capital gain. You applied the small business capital gains tax (CGT) rollover concessions at that time. An associated entity bought a property (the property) for the purpose of you setting up a new business. The property settled in 20XX. You experienced delays in obtaining the design and permits for the fit-out of the property. The fit-out commenced in 20XX. There were also additional delays with the fit-out of the property due to issues in obtaining various tradespersons to complete the fit-out work. You have spent approximately $XXX,XXX for the fit-out of the property. The business commenced trading in 20XX; however the fit-out was not finalised until 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 Income Tax Assessment Act 1997 (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. 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.