Private ruling: CGT - small business concessions
Published: May 2014
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Will the Commissioner allow you, under subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997), an extension of the replacement asset period in paragraph 104-185(1)(a) of the ITAA 1997? | A1: Yes.

Relevant facts and circumstances: You acquired a property. The property became no longer suitable for the intended purpose. The property was reacquired by a government department. You have subsequently been trying to acquire a replacement property, however you have been the unsuccessful bidder at a number of auctions and you are continuing to investigate potential replacement properties. You have been checking property listings, visiting properties and speaking to agents. You have acquired additional assets to use on the replacement property once you have found a suitable property and are the successful bidder.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 104-185 | Income Tax Assessment Act 1997 Section 104-190

Reasons for decision: Detailed Reasoning - Roll-over relief: The small business roll-over allows you to defer the capital gain made from a capital gains tax (CGT) event if you acquire one or more replacement assets and satisfy certain conditions. The conditions which must be met to obtain relief are set out in Subdivision 152-A of the ITAA 1997. For you to obtain a roll-over, subsection 104-185(1) of the ITAA 1997 requires you to acquire a replacement asset within a period starting one year before, and ending two years after the date of disposal of the original asset. Subsection 104-190(2) of the ITAA 1997 states that the Commissioner may exercise his discretion to extend those time limits. | Detailed Reasoning - Commissioner's discretion: In determining if the discretion would be exercised, the Commissioner must have considered the following factors: • 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 any mischief is involved, and • consideration of the consequences. These factors as they relate to you are discussed below. You have been trying to acquire a replacement property during the replacement period and have been the unsuccessful bidder at auctions and you are continuing to investigate potential replacement properties. You have been acquiring additional assets to use on the replacement property, indicating your intention to continue your business activities. You have provided an acceptable explanation for an extension of time. After weighing up all factors provided, it would seem fair and equitable to provide an extension of time. The granting of an extension in the circumstances will not give rise to any prejudice towards the Commissioner. There will not be any unsettling of any persons other than the Commissioner, nor will it unsettle any established practices as the granting of an extension of time to a taxpayer, dependent upon the facts, is itself an established practice. The granting of an extension of time in the circumstances would not result in any amount of unfairness to people in similar circumstances or like positions to you. The ability to apply for an extension of time is available to the wider taxpaying public. Having considered the relevant facts, the Commissioner is able to apply his discretion under subsection 104-190(2) and allow a reasonable extension to the time limit. The extension will allow a further 12 months to purchase a replacement asset for the purposes of section 104-185 of the ITAA 1997.