Private ruling: CGT small business concessions
Published: January 2014
Ruling period: Year ending 30 June 2014 | Year ending 30 June 2015
Date scheme commenced: 1 July 2013

Ruling: 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? | Yes

Relevant facts and circumstances: You elected to apply the small business rollover to the portion of a capital gain that you made in the 2011-12 financial year. This election was noted on your 2012 tax return. Several attempts were made to acquire a replacement asset within the replacement asset period. You have provided evidence of negotiations relating to the potential acquisitions that were considered. To date you have not acquired a replacement asset as the negotiations have been unsuccessful or the assets were not suitable. You received advice that the ATO were reviewing your application of the small business concessions in the 2011-12 financial year. You were subsequently advised that the review was being escalated to audit. The audit was finalised and determined that no further action was required and that you had correctly applied the small business concessions.

Relevant legislative provisions: Income Tax Assessment Act 1997 paragraph 104-185(1)(a) | Income Tax Assessment Act 1997 subsection 104-190(2)

Reasons for decision: Summary: Where a taxpayer elects 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 Income Tax Assessment Act 199 7). 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 made a capital gain following a CGT event and chose the small business rollover for a portion of the gain. While you made several attempts to purchase a replacement asset within the replacement asset period you have been unsuccessful due to failed negotiations. Additionally, you were awaiting the decision of an ATO audit. Having considered the relevant factors above, and the particular circumstances of your case, the Commissioner will apply his discretion to extend the replacement asset period.