Private ruling: Capital gains tax - replacement asset
Published: July 2012
Ruling period: Year ending 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Question and answer | Will the Commissioner exercise his discretion and extend the time for obtaining a replacement asset for 12 months? | Yes.

Relevant facts and circumstances: Your property was compulsory acquired. There was a dispute over the value of the property. Court proceedings were put in place. It took some time for a court decision to be made and the finalisation of the payment.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 124-70. | Income Tax Assessment Act 1997 Section 124-75. | Income Tax Assessment Act 1997 Subsection 124-75(2). | Income Tax Assessment Act 1997 Subsection 124-75(3). | Income Tax Assessment Act 1997 Paragraph 124-75(3) (a). | Income Tax Assessment Act 1997 Paragraph 124-75(3)(b). Reasons for decision | Section 124-70 of the ITAA 1997 allows capital gains tax roll-over relief if an asset owned by the taxpayer is compulsorily acquired by an Australian government agency. A further requirement is that the owner of the original asset must receive money or another CGT asset or both for the CGT event to be eligible for roll-over. On satisfying these conditions section 124-75 of the ITAA 1997 provides other requirements which must be satisfied if money is received for the event happening. | Under subsection 124-75(2) of the ITAA 1997, the owner of the asset must incur expenditure in acquiring another CGT asset. In accordance with paragraph 124-75 (3) (a) of the ITAA 1997 at least some of the expenditure must be incurred no earlier than one year before the event happens or under paragraph 124-75(3) (b) of the ITAA 1997 no later than one year after the end of the income year in which the event happens, or within such time as the Commissioner allows in special circumstances. | To meet the requirements of paragraph 124-75(3) (b) of the ITAA 1997 the new asset must be acquired on or before 30 June 2011or within such time as the Commissioner allows in special circumstances. | You are seeking an extension of 12 months. | To determine if the time limit should be extended, we consider factors such as whether: | · You have an acceptable explanation for not acquiring a replacement asset in the time frame | · It would be fair and equitable in the circumstances to allow further time to acquire an asset | · Prejudice to the Commissioner may result from additional time being allowed to you | · It would be fair and equitable to people in similar positions and the wider public interest and | · Any mischief is involved. | In your circumstances, you have been delayed in purchasing a replacement asset due to court proceedings which were not finalised for quite some time. | In considering all of your circumstances the Commissioner will extend the time period for you to obtain a replacement asset as a delay in receiving your payment from the relevant authority is a reasonable explanation for granting the extension of time.


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