Private ruling: Commissioner's discretion - replacement asset
Date of advice: 3 August 2023
Published: 18 September 2023
Ruling period: Year ending 30 June 2023 | Year ending 30 June 2024
Date scheme commenced: 4 August 2023

Ruling: Q1: Will the Commissioner exercise his discretion to extend the replacement asset period until 30 June 2024 under subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) in respect of the small business roll-over in Subdivision 152-E of the ITAA 1997? | A1: Yes. After taking into consideration your relevant circumstances, including the inability to secure tradesmen, building services and a specialised service provider due to recent bushfire, and flooding events in the area, the Commissioner will allow an extension of time to 30 June 2024.

Relevant facts and circumstances: The client owns a property previously used as a factory. A severe weather event occurred, and the premises was destroyed. The insurance company carried out a building inspection. The assessment of the building inspection determined that the entire site was a total loss. On the day of the storm, one of the adjoining buildings was destroyed. The other buildings were rendered unrepairable. An insurance settlement was received as compensation. Due to recent bushfire and flooding events in the area, tradesmen and building services have been unable to secure. As a result, the remaining demolition and subsequent construction of the replacement structure has not begun. One of the structures contains asbestos which requires specialised service providers who are unable to keep up with demand. No further progress can be made until this is completed. There has been no expenditure to replace the structure at this time, other than the clean-up of the destroyed building, which was incurred during 2020­-21. The remainder of the site will be cleaned up and a new concrete slab will be poured during 2023- 24.

Relevant legislative provisions: Income Tax Assessment Act 1997 paragraph 40-365(3)(b) | Income Tax Assessment Act 1997 paragraph 124-75(3)(b) | Income Tax Assessment Act 1997 subsection 104-190(2)