Private ruling: CGT - replacement assets
Date of advice: 23 July 2024
Published: 2 September 2024
Ruling period: Year ended 30 June 2024 | Year ended 30 June 2025
Date scheme commenced: 1 July 2023

Ruling: Q1: Will the Commissioner exercise his discretion under subsection 40-365(3)(b) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow the taxpayer further time to incur expenditure or start to hold replacement assets to 30 June 2025? | A1: Yes. Having considered your circumstances and the relevant factors, including the delays in receiving the insurance proceeds and the difficulties sourcing suppliers, the Commissioner is able to apply his discretion under subsection 40-365(3) of the ITAA 1997 and allow an extension of time. Further information on what happens when you stop holding a depreciating asset can be found by searching for 'QC 45987' on our website ato.gov.au.

Relevant facts and circumstances: You own a property. A weather event occurred at the property and the solar hot water system was damaged. An insurance claim was submitted which was accepted by the insurer. The insurer proceeded to investigate and outsource repairs but struggled to get tradespeople to complete the repairs. You agreed to a payout value instead. Without the insurance payout you lacked the funds to purchase and install a new solar hot water system. You asked the original OEM to install replacement panels, but they are refusing to work on the site due to the damage. You have explored the market for alternative suppliers but found limited options in the area.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 40-365