Private ruling: Capital Gains Tax - Extension of time to acquire a replacement asset
Date of advice: 18 July 2016
Published: August 2016
Ruling period: Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016 | Year ending 30 June 2017
Date scheme commenced: 1 July 2013

Ruling: Q1: Will the Commissioner exercise his discretion under subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) and allow you to choose as a replacement asset, an asset acquired more than two years after the disposal of the asset being replaced? | A1: Yes, an extension will be allowed to XX/XX/XXXX.


Relevant legislative provisions: Section 104-10 of the Income Tax Assessment Act 1997 | Subsection 104-185(1) of the Income Tax Assessment Act 1997 | Subsection 104-190(2) of the Income Tax Assessment Act 1997

Reasons for decision: Summary: Unless otherwise specified, all legislative references in the following Reasons for Decision are to the Income Tax Assessment Act 1997 . Having considered the relevant facts, the Commissioner is able to apply his discretion under subsection 104-190(2) and allow a reasonable extension to the time limit to XX/XX/XXXX. | Detailed Reasoning - Detailed reasoning: The small business rollover allows you to defer the capital gain made from a CGT event if you acquire one or more replacement assets and satisfy certain conditions. The conditions which must be met to obtain relief are set out in Subdivision 152-A. For you to obtain a rollover, subsection 104-185(1) requires you to acquire a replacement asset, and that it be an active asset of yours, within a period starting one year before, and ending two years after the date of disposal of the original asset. Subsection 104-190(2) states that the Commissioner may exercise his discretion to extend those time limits. In determining if the discretion would be exercised the Commissioner has considered the following factors: • evidence of an acceptable explanation for the period of the extension requested (and whether it would be fair and equitable in the circumstances to provide such an extension) • prejudice to the Commissioner which may result from the additional time being allowed (but the mere absence of prejudice is not enough to justify the granting of an extension) • unsettling of people, other than the Commissioner, or of established practices • fairness to people in like positions and the wider public interest • whether any mischief is involved, and • consequences of the decision. Having considered the relevant facts, the Commissioner is able to apply his discretion under subsection 104-190(2) and allow a reasonable extension to the time limit. Allowing an extension is not prejudicial to the Commissioner in this case nor is it unfair to other people in similar positions. You have provided a reasonable explanation given the circumstances and an extension will be granted until XX/XX/XXXX.

You sold an asset which you used to carry on a business. | You made a capital gain on the sale. | You met the eligibility criteria for the small business capital gains tax (CGT) concessions. | You were eligible to apply the small business CGT rollover. | Since the sale of the asset you had significant difficulty acquiring a replacement asset for the following reasons: | • The lack of appropriate assets to acquire as a replacement asset | • The sale contracts to acquire a replacement asset falling through for reasons outside your control. | • You were considering acquiring a certain type of asset but were unsure whether it would qualify as a replacement asset. Due to the uncertainty you engaged your tax agent to undertake research into the issue. You subsequently lodged a private ruling application on the issue with the Australian Taxation Office (ATO). It took some time for the private ruling to issue.