Private ruling: Extension to the replacement asset period
Date of advice: 26 July 2016
Published: September 2016
Ruling period: Year ending 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Will the Commissioner exercise his discretion under subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow an extension to the replacement asset period? | A1: Yes, the replacement asset period is extended to 30 June 2017.


Relevant legislative provisions: Section 104-185 Income Tax Assessment Act 1997 | Section 104-190 Income Tax Assessment Act 1997

Reasons for decision: Summary: The small business roll-over allows you to defer the capital gain made from a Capital Gains Tax (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 of the ITAA 1997. For you to obtain a roll-over, subsection 104-185(1) of the ITAA 1997 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) of the ITAA 1997 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) of the ITAA 1997 to allow a reasonable extension to the time limit until 30 June 2017.

You and another entity owned all issued shares in equal proportions in a company. | The company operated a business. | You and the other entity sold all your shares in the company. | The sale contract contained a restraint clause. You were restrained from commencing a business or activity (as described in the sale contract) during that period. | You have since started searching for some business opportunities and have had some potential opportunities, however more time is needed before you can secure a new business and you are therefore seeking an extension to find a new business opportunity.