Private ruling: Extension of time to obtain a replacement asset
Date of advice: 5 July 2018
Published: September 2018
Ruling period: Year ending 30 June 2019 | Year ending 30 June 2020
Date scheme commenced: 1 July 2018

Ruling: Q1: Will the Commissioner exercise his discretion under subsection 124-75(3) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the time required to obtain a replacement asset for a compulsorily acquired asset? | A1: Yes. The Commissioner will extend the time limit to acquire the replacement asset to 30 June 20XX taking into account the relevant considerations in TD 2000/40.

Relevant facts and circumstances: A portion of pre-CGT land owned by an entity was compulsorily acquired. The entity received an advance on the amount of compensation that may be payable to the entity. The entity has been preparing a formal claim for compensation including various expert reports. At this stage no formal claim has yet been lodged, while various expert reports are finalised. When the claim is lodged, it will consist of a number of parts, one being for the loss of the land and the second part being for the loss of earnings associated with the compulsorily acquired land, causing further delay. The legal representatives involved are currently in communication with the relevant authorities to try to arrange a meeting between all parties involved to progress the claim. The quantum of the entity’s compensation cannot be ascertained at this stage. Estimates of the claim for compensation are significantly higher than the amount the entity has received.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 124-B | Income Tax Assessment Act 1997 Subsection 124-75(3)