Private ruling: CGT - small business concessions
Published: April 2015
Ruling period: Year ending 30 June 2015 | Year ending 30 June 2016
Date scheme commenced: 1 July 2014

Ruling: Q1: 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? | A1: Yes

Relevant facts and circumstances: You disposed of an asset and made a capital gain. You elected to apply the small business rollover contained in Division 152-E of the ITAA 1997 to part of the capital gain. You have been researching various opportunities to acquire a replacement asset. However due to difficult economic conditions and being located in a remote area you have not been able to purchase a suitable replacement asset to date. You will continue to investigate suitable replacement assets.

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 or the rolled over gain will crystallise. However the Commissioner may extend the replacement asset period in certain circumstances (subsection 104-190(2) of the ITAA 1997). 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 have attempted to locate a replacement asset within the replacement asset period you have been unsuccessful to date. 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.