Private ruling: CGT - disposal - compulsory acquisition - rollover relief
Date of advice: 13 July 2022
Published: October 2022
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise his discretion under subsection 124-75(3) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the time required to obtain a replacement asset for a compulsorily acquired asset? | A1: Yes. Subsection 124-75(3) of the ITAA 1997 requires you to incur expenditure in acquiring a replacement CGT asset no later than one year after the CGT event or within such further time as the Commissioner allows in special circumstances. Based on the facts and circumstances of your case the Commissioner will exercise the discretion to allow an extension of time to purchase a replacement asset.

Relevant facts and circumstances: You purchased a property which was primarily for use by a related company for the conduct of its business. You signed a Contract of Sale for the sale of the property to the local council. The disposal of the property happened as a consequence of the council inviting you to negotiate an acquisition of the property by agreement, failing which, the property would be acquired compulsorily. You immediately commenced a review of the marketplace to identify suitable replacement properties without success. You inspected a number of properties, but they were either sold before you could lodge an offer, taken off the market, or unsuitable for the needs of the business. The investigations within the marketplace for an available suitable replacement property have been substantially hindered by the covid pandemic, lockdowns and an inability to inspect available properties to ensure that current configuration meets the requirements for the intended purpose. You purchased a replacement property over one year after the end of the income year in which the original property was compulsory acquired. You purchased the replacement property for the same purpose as the original property.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 124-75(3)