Private ruling: CGT - small business concession
Date of advice: 6 August 2025
Published: 7 October 2025
Ruling period: 30 June 20XX | 30 June 20XX | 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion under subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the replacement asset period? | A1: Yes. Having regard to your circumstances and your circumstances leading to the delay in replacing the disposed property, it is considered that the legal proceedings have prevented you from acquiring a replacement asset within 2 years. The Commissioner will exercise the discretion under subsection 104-190(2) of the ITAA 1997 to extend the replacement asset period to a specified date.

Relevant facts and circumstances: You and your parents Person A and Person B owned a property located at a specified address, that was purchased on a specified date. You had equal share of the of property. The Property was sold on a specified date with settlement occurring on a specified date. You commenced farming Crop A on a specified date as a partnership with you, your parents and Person C. After the passing of Person C, the business was restructured to operate through Company A from a specified date. You and your parents all held equal shares in Company A. A further restructure took place on a specified date, transitioning the business to a discretionary trading trust, with Company B, acting as trustee for Trust A. The Property has been leased to the business entity at all times for the purpose of farming Crop A. In the specified financial years, the business suffered significant losses due to contamination from neighbouring farms. During the first incident, legal action was brought against you on the grounds that your farm products were unsuitable for use by other farmers, despite Crop A being certified as fit for purpose by a regulatory authority. The plaintiff succeeded in that action and was awarded a financial settlement, placing your business under substantial financial pressure. A few years later, a similar event occurred. This time, you concluded that the issue stemmed from professional negligence by the regulatory body responsible for Crop A certification. You initiated legal proceedings in a specified year. As a result of these 2 major events, your bank began to pressure you to reduce your debt, despite your legal representatives' view that you had a strong case. Due to the banks pressure, you made the decision to sell your Property. Your intention was once legal proceedings were finished to identify and purchase a more suitable property. You have continued to operate your Crop A farming enterprise by leasing land from multiple landholders, including a key multi-year lease that remains in place. You plant a large farmland to grow Crop A annually. Due to crop rotation requirements, where certified Crop A cannot be regrown in the same paddock for at least few years, land leasing is integral to your business model. However, you also require a property to store your substantial farming equipment and serve as a central operational base. The legal proceedings have taken longer than expected, therefore you have been unable to resolve the matter and acquire a new property. You have provided a letter from your legal representative outlining the nature of the dispute and confirming that the next trial is scheduled to commence on a specified date. Banks have declined to provide funding until the outcome of the litigation is known, which has prevented you from purchasing a new farm despite your original intentions.

Relevant legislative provisions: Income Tax Assessment Act 1997 subparagraph104-190(1A)(b)(i) | Income Tax Assessment Act 1997 subsection 104-190(2) | Income Tax Assessment Act 1997 Division 152-E