Private ruling: Capital Gains Tax
Date of advice: 19 May 2016
Published: June 2016
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 to XX/XX/XXXX? | A1: Yes

Relevant facts and circumstances: You sold an asset and applied the small business rollover concession. Your intention was to purchase an asset but you needed to acquire a larger property first to accommodate for the asset. You sought advice and researched options which were available to you in relation to acquiring a large enough property for the asset. You first started making enquires about properties in XXXX. You were advised on XX/XX/XXXX that the property next door to your current property would become available for lease once the property is brought up to standard. You signed a property lease on XX/XX/XXXX. On the XX/XX/XXXX a purchase order for the asset was issued. The asset has been installed and was commissioned on XX/XX/XXXX

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

Reasons for decision: Summary: Where a taxpayer elects to take advantage of the small business rollover, there are rollover conditions that must be satisfied by the end of the replacement asset period. This period starts one year before and ends two years after the last CGT event that occurs in the income year for which you choose the roll over, or a longer period that the Commissioner allows. If the rollover conditions are not met within the replacement asset period the gain will become assessable. You sold the asset on XX/XX/XXXX and had not acquired a new asset by XX/XX/XXXX. Therefore, the acquisition of the replacement asset has occurred outside of the replacement asset period. 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. Having full regard to your circumstances, we consider that you have provided an acceptable explanation for the delay in acquiring a new asset. We do not consider that extending the asset replacement period would unsettle others or that any mischief is involved. Accordingly, the Commissioner will exercise his discretion to allow an extension of time to acquire a replacement asset.