Private ruling: Commissioner's discretion - further time to make a choice
Date of advice: 15 October 2021
Published: January 2022
Ruling period: 1 July 20XX to 30 June 20XX
Date scheme commenced: 1July 20XX

Ruling: A2: If the Commissioner does allow additional time to make a choice to utilise the retirement exemption, can the new limit be when the amended 20XX income tax return is lodged? Additional information The Commissioner has not considered your eligibility for the small business concessions in this ruling. You should ensure that you satisfy the basic conditions and any other relevant conditions.

Relevant facts and circumstances: The taxpayer owned X% of the shares in two companies. Both of these companies met the definition of a small business under section 328-110 of the ITAA 1997. The taxpayer signed a contract for the sale of these shares on 20XX. The agreed value of the sale was $X which consisted of xxxx, xxxx and $X to be paid via vendor finance. The vendor finance terms provided security to the taxpayer of specific assets held by one of the companies. Both the companies were put into liquidation in 20XX. This was not anticipated by the taxpayer when entering into the share sale contracts prior to this date. The taxpayer sought to exercise their rights under the vendor finance to take possession and sell the assets which it had security over to recover the value of the vendor finance. The liquidator disputed the validity of the taxpayer's vendor finance security documents and initiated legal proceedings against the taxpayer. The taxpayer lodged their 20XX tax return on 20XX as there was no indication of the outcome of the legal proceedings and the taxpayer believed they would not receive the money receivable under vendor finance agreement. In 20XX the taxpayer reached an agreement with the liquidator which the proceeds were paid to the taxpayer.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 103-25(1)(b) | Income Tax Assessment Act 1997 section 328-110


Question One: Will the Commissioner exercise the discretion in subsection 103-25(1)(b) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow further time to make a choice to utilise the retirement exemption? | It is accepted that you satisfy the factors used to consider an extension of time in relation to the retirement exemption. You have an acceptable explanation for not making the choice by the time it should have been made and the Commissioner considers it fair and equitable in the circumstances to allow you more time to make a choice.