Private ruling: Replacement asset roll over
Published: March 2014
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner allow you further time until mm/yyyy under paragraph 124-75(3)(b) of the Income Tax Assessment Act 1997 (ITAA 1997) to acquire a replacement capital gains tax (CGT) asset? | A1: Yes.


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

Reasons for decision: Summary: Subdivision 124-B of the Income Tax Assessment Act 1997 (ITAA 1997) explains the circumstances when a replacement asset rollover is available for an asset that is compulsorily acquired, lost or destroyed. If you receive money as a result of a compulsory acquisition or when a CGT asset is lost or destroyed, you can only choose a rollover if you incur expenditure in acquiring another CGT asset. Under subsection 124-75(3) of the ITAA 1997, you must incur at least some of the expenditure no earlier than one year before the event happens or, within one year after the end of the income year in which the event happens. This period may be extended in special circumstances as outlined in the following example in Taxation Determination TD 2000/40: Graeme had a commercial property compulsorily acquired by a State authority. Graeme is having a protracted legal dispute with the authority over the quantum of the compensation. On these facts, we would accept that there are special circumstances to allow further time. In your case, CGT event C1 occurred when you first received compensation for the loss in mm/yyyy. Your case is similar to the example provided in TD 2000/40 in that there has been an ongoing legal dispute with relevant parties over the quantum of compensation you received. You received the settlement proceeds from the legal dispute in mm/yyyy. You fully reinvested the proceeds and purchased investments in mm/yyyy. Taking your full circumstances and the above principles into account, the Commissioner will allow an extension of time until mm/yyyy.

Relevant facts: In 20XX, there was an unlawful off market transfer of your investments. This occurred without your authority. No consideration was paid to you for the transfer. The investments were then disposed of on the open market. | The entity's conduct was later discovered and reported to the police. This resulted in the entity being charged and convicted of several offences. | In addition you issued proceedings in the Supreme Court obtaining freezing orders against the entity and sought compensation. | By mm/yyyy you had recovered some money. You have fully re-invested this amount into new investments by mm/yyyy. | The amount recovered was significantly less than the loss you suffered in the theft. You joined a related entity as an additional defendant in the proceeding in mm/yyyy. | Your intention was that any further compensation received would also be re-invested in similar investments and held by you for the same purpose as the stolen investments. | Mediation was held in mm/yyyy at which without prejudice negotiations commenced but were not concluded. | After protracted negotiations, a settlement agreement for an amount of cash was executed in mm/yyyy and with payment of this amount made in mm/yyyy. | You fully reinvested the amount in investments in mm/yyyy.