Private ruling: Replacement asset rollover
Published: March 2014
Ruling period: Year ending 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Will the Commissioner exercise his discretion under subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the replacement asset period to the 2014-15 financial year? | A1: Yes.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. In the 2010-11 financial year you elected to use the small business rollover to defer capital gains that you made. You have provided a number of potential replacement assets that you have considered within the replacement period, however, you were not able to negotiate a suitable acquisition within the replacement period. You have been successful in gaining finance with a bank for a business purchase. The contract to purchase this business will be completed soon. You have a contract on a second business. You are in the process of offering to purchase a third business. You believe that by purchasing the three businesses, you will satisfy the CGT rollover issue. You had previously requested, and were granted, an extension to the replacement asset period to 30 June 2013 in relation to the above CGT events that were rolled over.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 104-190(2).

Reasons for decision: Summary: In order to apply the small business rollover, a replacement asset must be acquired within two years after the relevant CGT event. However the Commissioner may extend the replacement asset period in certain circumstances (subsection 104-190(2) of the ITAA 1997). The relevant factors in determining whether to extend the replacement asset period are: • there should be evidence of an acceptable explanation for the period of extension requested and that it would be fair and equitable in the circumstances to provide such an extension • account must be had to any prejudice to the Commissioner which may result from the additional time being allowed, however the mere absence of prejudice is not enough to justify the granting of an extension • account must be had of any unsettling of people, other than the Commissioner, or of established practices • there must be a consideration of fairness to people in like positions and the wider public interest • whether there is any mischief involved • a consideration of the consequences. You rolled over capital gains under the small business rollover during the relevant financial year. You have been unable to acquire a suitable replacement asset within the replacement period. You have however, considered the purchase of a number of businesses. You currently have two businesses under contract to purchase. We consider that you have made ongoing efforts to acquire a replacement asset. Having considered the relevant factors above, and the particular circumstances of your case, the Commissioner has applied his discretion and will extend the asset replacement period to the 20XX financial year.