Private ruling: Commissioner's discretion - extension of time
Date of advice: 4 July 2025
Published: 1 September 2025
Ruling period: Year ended 30 June XXXX | Year ended 30 June XXXX | Year ended 30 June XXXX | Year ending 30 June XXXX
Date scheme commenced: 1 October 20XX

Ruling: Q1: Will the Commissioner exercise his discretion under subsection 40-365(3) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the time limit for a replacement asset to be acquired? | A1: Yes. Having considered your circumstances and the relevant factors, the Commissioner is able to apply his discretion under section 40-365 of the ITAA 1997 and allow an extension of time to incur expenditure on replacement assets (or start to hold them).

Relevant facts and circumstances: You owned a business. Your business premises burnt to the ground. All plant and equipment were destroyed. You received an insurance payout, which resulted in an assessable balancing charge. You applied the balancing charge offset for the involuntary disposal of assets. You made a submission to the council for assistance. This was initially turned down and during the next six months this went back and forth with the councillors and council. In August XXXX the builder started work and was expected to be completed by May XXXX. However, there were unexpected building delays, and the new estimated completion date was August XXXX. You have been in negotiations for plant and equipment. The COVID-19 pandemic caused further delays regarding travel restrictions, disruption to building requirements, the availability of any supplies, manufacturing, along with shipping delays. You had disputes with the power company regarding the volume of the power supply to the building. Solar panels were installed to overcome limited power supply, while waiting for full electrical supply. Different equipment requires different power supplies and connections, so decisions about equipment could not be made until the power issues were resolved and the electrical distribution boards were installed. You started acquiring plant and equipment prior to the building being completed. The equipment you acquired was for a small-scale operation to commence. The Certificate of Occupancy was issued by the council. The building had a burst water pipe causing major extensive flooding throughout the building which led to further destruction issues. You were diagnosed with a health issue. Due to this, you had numerous trips to hospital and health specialists in which disrupted your ability to get replacement equipment. You have been able to re-open your business and small-scale operations started. You still need to acquire equipment for your large-scale operations.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 40-365(3)