Private ruling: Extension of time to the replacement asset period
Published: April 2013
Ruling period: Year ended 30 June 2011 | Year ended 30 June 2012 | Year ended 30 June 2013 | Year ended 30 June 2014
Date scheme commenced: 1 January 2011

Ruling: Q1: Will the Commissioner exercise his discretion under sub-section 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the replacement asset period in paragraph 104-185(a) of the ITAA 1997? | A1: Yes

Relevant facts and circumstances: You sold your business in month 20XX You advise that you intended to buy another business to use the small business roll-over concession You fell pregnant You advise that you had a difficult pregnancy, and a slow recovery from the pregnancy/birth. You have the caring responsibility of your children You advise that you are selling a property to enable you to buy a business The two year period for purchasing a replacement asset ended in month 20YY You request a 6 month extension of time to purchase the replacement business

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 104-185, | Income Tax Assessment Act 1997 Section 104-190, | Income Tax Assessment Act 1997 Section 104-197, and | Income Tax Assessment Act 1997 Subdivision 152-E

Reasons for decision: Summary: Under subsection 104-197(1) of the ITAA 1997, CGT event J5 happens if you chose a small business roll-over under subdivision 152-E of the ITAA 1997 and have not acquired a replacement asset by the end of the replacement asset period. Paragraph 104-185(1)(a) of the ITAA 1997 states that the replacement asset period is the period 'starting one year before, and ending 2 years after, the last CGT event in the income year for which you obtain the rollover'. Subsection 104-197(5) of the ITAA 1997 provides for the replacement asset period to be modified or extended in accordance with section 104-190 of the ITAA 1997. Subsection 104-190(2) of the ITAA 1997 gives the Commissioner discretion to extend the replacement asset period. In determining if the discretion would be exercised, the Commissioner has considered the following factors: · whether there is evidence of an acceptable explanation for the period of extension requested and whether it would be fair and equitable in the circumstances to provide such an extension; · whether there is any prejudice to the Commissioner if the additional time is allowed, however the mere absence of prejudice is not enough to justify the granting of an extension; · whether there is any unsettling of people, other than the Commissioner, or of established practices; · fairness to people in like positions and the wider public interest; · whether there is any mischief involved, and; · the consequences of the decision. The circumstances that led to your delay in acquiring a replacement asset; the complications you experienced in pregnancy and your slow recovery, are considered an acceptable explanation for your delay. A favourable exercise of the Commissioner's discretion would be fair and equitable in your circumstances, and does not cause prejudice to the Commissioner, is not unfair to others in like positions, and is not unsettling of other people or established practices. The Commissioner agrees to a six (6) month extension of time to the replacement asset period.