Private ruling: Commissioner's discretion - extend the replacement asset period
Published: June 2012
Ruling period: Year ended 30 June 2009 | Year ended 30 June 2010 | Year ended 30 June 2011 | Year ended 30 June 2012
Date scheme commenced: 1 July 2008

Ruling: Q1: Will the Commissioner allow you an extension of the two-year replacement asset period? | A1: No.

Relevant facts and circumstances: Approximately four years ago you sold units and shares in your business. You utilised the small business rollover to defer the capital gain in your tax return approximately three years ago. The two year replacement period ended approximately two years ago. You did not purchase another business within this timeframe. Approximately for the last five years you have engaged numerous brokers to assist in the search for potential business opportunities. It has always been your intention to replace the business you sold. You have been unable to find a business that meets your criteria.

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: Under paragraph 104-185(1)(a) of the ITAA 1997, the replacement asset period starts one year before, and ends two years after the last CGT event in the income year for which you obtain the small business roll-over. The Commissioner has a discretion to extend the replacement asset period (subsection 104-190(2) of the ITAA 1997). In your case, you have been unable to find a replacement business since you sold your business approximately four years ago. You have not indicated any circumstances out of your control that have prevented you from purchasing a replacement business. Additionally, extensions of up to 12 months are normally granted with any longer extensions only being granted in exceptional circumstances. Nearly two years has elapsed since the replacement asset period elapsed without any exceptional circumstances being identified. | Detailed Reasoning - Conclusion: Based on the facts and your submissions, it is considered that the Commissioner shouldn't exercise his discretion under subsection 104-190(2) of the ITAA 1997 to extend the replacement asset.

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