Private ruling: Capital gains tax
Published: June 2012
Ruling period: Year ended 30 June 2011 | Year ended 30 June 2012
Date scheme commenced: 1 July 2010

Ruling: Q1: Will the Commissioner exercise his discretion under paragraph 103-25(1)(b) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you an extension of time to make a choice to apply the small business retirement exemption? | A1: Yes.

Relevant facts and circumstances: You are under 55 years of age. Your capital gains tax (CGT) asset was a share in property which you operated a business from. You satisfy the maximum net asset value test for the small business capital gains tax concessions. You sold your share of the real property and your share of the goodwill in the business. You were unable to meet the timeframe to pay the money into your superannuation fund as your agent inadvertently lodged your income tax return prior to the payment being made. The tax return lodged was prepared to show the scenario of your tax refund position if the capital gains tax retirement concession was not utilised. Due to an error, your income tax return was mistakenly lodged. Your agent intended to lodge the return to include the capital gain tax retirement concession.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 103-25(1)(b), and | Income Tax Assessment Act 1997 section 152-305.

Reasons for decision: Summary: According to the Advance guide to capital gains tax concessions for small business 2010-11, the retirement exemption requires amounts to be contributed into a complying superannuation fund or a retirement savings account if the recipient is younger than 55 years old when they make a choice to use the retirement exemption. To satisfy this requirement you must pay the amount into a complying superannuation fund no later than the day you choose the retirement exemption. Failure to immediately contribute the amount will mean the conditions are not satisfied and the retirement exemption will not be available. However, in appropriate circumstances, the Commissioner may extend this period. The abovementioned guide also provides the relevant considerations applied by the Commissioner to extend the period. Having regards to your full circumstances and the above principles, the Commissioner will grant you an extension to the make the choice to use the small business retirement exemption and to make the required contribution to an eligible superannuation fund. | Detailed Reasoning - Additional information: This ruling has not considered your eligibility for the small business retirement exemption. You should ensure that you satisfy the basic conditions and the other conditions relevant for the exemption. More information is available in the publication Advanced guide to capital gains tax concessions for small business 2010-11 (NAT 3359), which is available on our website www.ato.gov.au.

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