Private ruling: Small business concessions - replacement asset rollover - extension of time
Date of advice: 12 April 2018
Published: June 2018
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion available under subsection 124-75(3) of the Income Tax Assessment Act 1997 (ITAA 1997) to provide you with an extension of time until 30 June 2018 to acquire replacement assets? | A1: Yes.


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

Reasons for decision: Summary: Subdivision 124-B of the Income Tax Assessment Act 1997 (ITAA 1997) explains the circumstances when a rollover is available for an asset that is compulsorily acquired, lost or destroyed. If you receive money as a result of the compulsory acquisition, you can only choose a rollover if you incur expenditure in acquiring another CGT asset. Under subsection 124-75(3) of the ITAA 1997, you must incur at least some of the expenditure no earlier than one year before the event happens or, within one year after the end of the income year in which the event happens. This period may be extended in special circumstances as outlined in Taxation Determination TD 2000/40 Income tax: capital gains: what are ‘special circumstances’ for the purposes of subsection 124-75(3) of the Income Tax Assessment Act 1997?. In determining if the discretion would be exercised the Commissioner must 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: Your asset was compulsorily acquired. The small business rollover provisions require that you take steps to acquire a replacement asset. You have taken steps to acquire replacement assets as evidenced by the fact that you have already acquired $xxx worth of assets. You have been unable to acquire another asset due to not knowing the exact amount that you were to receive in compensation until 20XX . 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 until 30 June 2018.

Relevant facts: You acquired a commercial rental property. (The property) | The property was acquired prior to 20 September 1985. | The property was compulsorily acquired in 20XY. | You received $xxx in compensation in 20XY. | You were involved in ongoing negotiation in relation to additional amounts of compensation. | You received the final amount of $xxx less legal fees in 20XX. | You have been actively seeking other assets to purchase. So far you have acquired one replacement asset for $xxx settlement occurring in 20XX. | You have not used the remaining amount on replacement assets yet because you have not been able to find another suitable property. | You have inspected a number of properties.