Private ruling: CGT - SBC - replacement asset extension of time
Date of advice: 7 March 2016
Published: April 2016
Ruling period: Year ending 30 June 2016 | Year ending 30 June 2017
Date scheme commenced: 1 July 2015

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 made a capital gain and elected to take advantage of the small business rollover. You have been actively seeking another asset to purchase as a replacement asset but you have been unable to find anything appropriate at this stage. You have also received indicative approval for finance from a lender to find the purchase of the replacement asset. You have requested an extension to the asset replacement period to give you enough time to find a suitable asset.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 104-190(2).

Reasons for decision: Summary: In order to apply the small business rollover, a replacement asset must be acquired within two years after the relevant CGT event. However the Commissioner may extend the replacement asset period in certain circumstances (subsection 104-190(2) of the Income Tax Assessment Act 199 7). 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 disposed of your asset. You have been unable to acquire another asset due to a lack of suitable businesses for sale in your area. You have taken the steps of registering your interest with real estate agents and gaining pre-approval from a bank lender. We consider that you have made ongoing efforts to acquire a replacement asset. Having considered the relevant factors above, and the particular circumstances of your case, the Commissioner has applied his discretion and will extend the asset replacement period.