Private ruling: Capital gains tax - compulsory acquisition - Commissioner's discretion.
Published: August 2013
Ruling period: 1 January 2013 to 23 March 2013
Date scheme commenced: 1 July 2010

Ruling: Q1: Would the Commissioner extend the time period under paragraph 124-75(3)(b) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to acquire a replacement asset? | A1: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 104-10(6) | Income Tax Assessment Act 1997 subsection 124-75(3)

Reasons for decision: Summary: You may be able to choose a roll-over if a capital gains tax (CGT) asset is compulsorily acquired by an Australian Government agency. If you receive money for the sale of the asset then further conditions are imposed by section 124-75 of the Income Tax Assessment Act 1997 (ITAA 1997). You must incur expenditure in acquiring another CGT asset no earlier than one year before the disposal happens and no later than one year after the end of the income year in which the disposal happens, or within such further time as the Commissioner allows in special circumstances. In determining whether special circumstances exist that will allow the Commissioner to extend the period for you to acquire a replacement asset, regard must be had to Taxation Determination TD 2000/40. TD 2000/40 provides guidelines for interpreting subsection 124-75(3) of the ITAA 1997, in particular what are special circumstances. Example 2 and 3 in TD 2000/40 are relevant as they provide examples of special circumstances that are relevant to your particular circumstances. In addition, in determining if the discretion would be exercised the Commissioner will consider the following factors: · 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, and · a consideration of the consequences. | Detailed Reasoning - Application to your circumstances: You were required to acquire a replacement asset by a specific date. However, you were involved in lengthy negotiations and experienced difficulties in acquiring an appropriate replacement property. You have acquired a replacement asset. The Commissioner will exercise his discretion under subsection 124-75(3) of the ITAA 1997 and extend the period for acquiring the replacement asset.

Relevant facts: You were the owners of a commercial property. | You purchased the property prior to 20 September 1985. | You received a notice of intention to acquire the property from a government department. | You received a notice of acquisition informing you that your property had been compulsorily acquired. | The notice of acquisition included an offer of compensation, in which you had a certain amount of time to accept the offer or to make a counter offer. | Since that date, there have been protracted negotiations between the parties. | You accepted an offer after a period of time. | Due to health issues, the parties have been restricted in their ability to find a replacement property. | You previously applied for, and were granted a private ruling for an extension of time to obtain a replacement asset for the commercial property. | You recently purchased a replacement property.