Private ruling: Small business concessions
Published: November 2014
Ruling period: Year ending 30 June 2013 | Year ending 30 June 2014
Date scheme commenced: 1 July 2012

Ruling: Q1: Will the Commissioner, pursuant to subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997), extend the time limit for the replacement asset to be acquired? | A1: Yes.

Relevant facts and circumstances: You made a capital gain from the sale of a property more than 2 years ago. You applied the small business rollover concession to disregard a portion of the capital gain. You considered multiple properties, listed with real estate agents, however most were too large and expenses for your business activity. You acquired a property during the 2013-14 financial year. The property you purchased was only listed for sale around the time of the expiration of the 2 year period.

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

Reasons for decision: Summary: 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, and that it be an active asset of yours, within a period starting one year before, and ending two years after the date of disposal of the original asset. Subsection 104-190(2) states that the Commissioner may exercise his discretion to extend those time limits. You disposed of your property more than two years ago. During this period, you have made numerous efforts to secure a replacement property. For a variety of reasons, to date you have been unable to find a suitable replacement asset. In determining if the discretion would be exercised the Commissioner has considered the following factors: • evidence of an acceptable explanation for the period of the extension requested (and whether it would be fair and equitable in the circumstances to provide such an extension) • prejudice to the Commissioner which may result from the additional time being allowed (but the mere absence of prejudice is not enough to justify the granting of an extension) • unsettling of people, other than the Commissioner, or of established practices • fairness to people in like positions and the wider public interest • whether any mischief is involved, and • consequences of the decision. Having considered the relevant facts, the Commissioner is able to apply his discretion under subsection 104-190(2) and allow an extension of time.