Private ruling: Small business retirement exemption
Date of advice: 17 August 2020
Published: December 2022
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 June 20XX

Ruling: Q1: Will the Commissioner exercise his discretion under subsection 103-25(1) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you an extension of time until 30 November 20XX to make a choice to apply the small business retirement exemption? | A1: Yes. Having considered your circumstances and relevant factors, the Commissioner will exercise his discretion under subsection 103-25(1) of the ITAA 1997 to allow an extension of time to make a choice to apply the small business retirement exemption.

Relevant facts and circumstances: You are less than 55 years of age. Your company ran a business from a factory which you owned. On XX March 20XX you entered into a contract to sell the factory to your superannuation fund. You used the proceeds from the sale of the factory towards building your new house and also put into the business. It was always your aim to then sell the current house and use the money to cover the capital gain. In your 20XX income tax return you elected the small business rollover concession on the capital gain made on the sale of your factory. You have not lodged your 20XX income tax return. In March 20XX, when you were to make a replacement asset purchase you were very ill. As you did not know whether you would be able to continue to work, you decided to change from a replacement asset purchase and decided to put the amount in the superannuation fund. You planned to pay the amount into a superannuation fund by May 20XX. You were either going to apply for a personal loan or sell your house to cover the amount for superannuation. Due to COVID-19 you were not able to apply for a personal loan and have not been able to put your house on the market because of quarantine and no open houses. You also asked the bank to put the mortgage payments on hold so did not believe that you would be successful in obtaining a personal loan. You are in the process of preparing your house to put on the market but need more time to enable a sale, or to wait for the banks to be able to provide personal loans again. Due to your illness you are looking at selling the business. You do not have funds to pay the capital gains as you have put your money into the business to keep it afloat during a difficult period. You need another six months to secure the funds and are requesting an extension of time of six months from May 20XX.

Relevant legislative provisions: Section 103-25 of the Income Tax Assessment Act 1997