Private ruling: CGT - small business concession
Date of advice: 7 February 2024
Published: 25 March 2024
Ruling period: Year ending 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Will the Commissioner exercise the discretion in subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the replacement asset period to 30 June 2024? | A1: Yes, having considered your circumstances and the relevant factors, the Commissioner will use the available discretion to grant you further time to acquire a replacement asset.

Relevant facts and circumstances: The trust owned the office. In MM 20YY the trust signed a contract to sell the office. Sale of the office resulted in a capital gain. The trust is a CGT small business entity with an aggregate turnover that is less than $2 million. Since settlement, the trust has been looking for replacement offices that suit their requirements in terms of size, layout, location and zoning that are within their budget and available for sale or available for vacant possession. The trust found limited listings in the same area as the office due to many small offices (suitable for the business) are owned by other owner occupiers and tightly held (only to be sold on the passing or retirement of the business owner.), those that are being sold are being acquired by developers and converted into office towers, and overall there is a decreasing number of small offices and even fewer listings. Due to challenges finding suitable replacement office in the area the trust also looked at offices in other areas. In MM 20YY, the trust found a suitable property and signed a contract to buy a residential apartment (the second office). The building the second office is in is zoned as 'mixed use' and the apartment is currently used to operate a business by the current tenant. The trust will start operating the business from the apartment when the current lease expires. The trust will use the second office for business only. There will be no private use of the apartment.

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