Private ruling: Compulsory acquisition rollover relief
Date of advice: 23 March 2021
Published: February 2022
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 20 September 20XX

Ruling: Q1: Will the intended use of the XXXXXX property satisfy the "same" or "similar" purpose test for the purposes of subsection 124-75(4) of the ITAA 1997? | A1: Yes. Taxation Determination TD 2000/42 provides guidance as to whether an asset is used for a similar purpose. The determination states that whether an asset is used for the same or similar purposes as another asset is a question of fact and degree. The newly acquired property will solely be used by the taxpayers to derive share-farming income. The new asset will be used for a similar purpose as the original asset and satisfies the "similar" purpose test under subsection 124-75(4) of the ITAA 1997. For more information on when a rollover is available please search QC 17204 on our website, ato.gov.au.

Relevant facts and circumstances: The Taxpayers are registered owners of land and it was purchased in 20XX. It has been the Taxpayers' main residence and has been used to derive the Taxpayers income. A government department issued a notice of compulsory acquisition of XX,XXX square metres of the land. The Taxpayers intend to access the rollover under Subdivision 124-B of the ITAA 1997 to acquire a replacement asset from the funds received under the compulsory acquisition. They commenced their search for suitable replacement land to meet the conditions of the roll over and the Taxpayers acquired a replacement property. The newly acquired property will solely be used by the taxpayers to derive income and the Taxpayers will not reside there.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 124-70 | Income Tax Assessment Act 1997 Section 124-75