Private ruling: CGT – small business concessions – replacement asset period – extension of time
Date of advice: 18 December 2018
Published: April 2019
Ruling period: Year ended 30 June 2019 | Year ended 30 June 2020
Date scheme commenced: 1 July 2018

Ruling: Q1: Will the Commissioner exercise his discretion under subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow an extension to the replacement asset period to XX December 20XX? | A1: Yes The small business rollover allows you to defer the capital gain made from a capital gains tax (CGT) 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 rollover, 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. After, reviewing the facts of your situation, the Commissioner will apply his discretion under subsection 104-190(2) of the ITAA 1997 and allow the extension of time.

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 capital gains tax (CGT) event was XX December 20XX. You have considered a number of potential replacement assets; however the assets considered did not match your business needs. You completing due diligence on a potential replacement asset in November 20XX, however this asset did not settle. The Commissioner applied his discretion on XX December 20XX, allowing an extension of time under subsection 104-190(2) of the ITAA 1997 to XX December 20XX. You are continuing to look for a suitable replacement asset which is within your price range and matches your business needs.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 152-A | Income Tax Assessment Act 1997 subsection 104-185(1) | Income Tax Assessment Act 1997 subsection 104-190(2)