Private ruling: Capital gains tax - replacement asset
Date of advice: 7 November 2019
Published: January 2020
Ruling period: Year ending 30 June 2018 | Year ending 30 June 2019
Date scheme commenced: 1 July 2017

Ruling: Q1: Will the Commissioner exercise his discretion under subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow an extension to the replacement asset period to XX November 20XX? | A1: Yes. After, reviewing the facts of your situation, the Commissioner will apply his discretion under subsection 104-190(2) of the ITAA 1997 and allow the extension of time.

Relevant facts and circumstances: You sold management rights in October 20XX. You elected to use the small business capital gains tax concessions, specifically the replacement asset rollover to defer the gain for a maximum of two years. The replacement asset period ended in October 20XX. From July 20XX, you began looking for a replacement asset and identified three management right businesses. During the replacement asset period, you made reasonable enquiries of each business, however, for a variety of commercial reasons, you were unable to secure a contract to purchase during the replacement asset period. On XX November 20XX, you signed a contract to purchase a management rights business owned and operated by yourself. The transaction settled shortly thereafter.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 152-A | Income Tax Assessment Act 1997 subsection 104-185(1) | Income Tax Assessment Act 1997 subsection 104-190(2)