Date of advice: 31 August 2018
Published: October 2018
Ruling period: Year ending 30 June 2016 | Year ending 30 June 2017 | Year ending 30 June 2018
Date scheme commenced: 01 July 2015

Ruling: Q1: Will the Commissioner exercise his discretion under subsection 104-190(2) of the Income Tax assessment Act 1997 (ITAA 1997) and allow you to choose the Property 2 which was acquired more than one year before the disposal of the Property 1 as the replacement asset? | A1: Yes, an extension has been granted so that the Property 2 will be a replacement asset of the Property 1. The small business rollover 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 rollover, 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. 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 entered into a verbal contract of sale to sell a farm property (Property 1). You received a formal written offer which was accepted regarding Property 1. You entered into a contract to purchase a replacement farm property (Property 2). You entered into a written contract of sale in 2015 to sell the Property 1. The sale of property 1 fell through. You entered into another written contract for sale which triggered a capital gain on the sale of the Property 1. Settlement occurred for Property 1. The sale for property 1 was registered at the Land Titles Office. You would like to apply Subdivision 152-E of the ITAA 1997 to the capital gain. However, you have acquired the replacement asset more than 12 months prior to the CGT event. You would like to request that the Commissioner extend the time limit to acquire the replacement asset to earlier than 12 months prior the CGT event. Assumption This private ruling has been provided on the assumption that you meet the basic conditions for the Capital gains tax small business concessions contained in Subdivision 152-A of the ITAA 1997, and any other conditions relevant for this rollover to apply under Subdivision 152-E of the ITAA 1997.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-185(1)(a) | Income Tax Assessment Act 1997 section 104-190 (1A) | Income Tax Assessment Act 1997 section 104-190 (2) | Income Tax Assessment Act 1997 subdivision 152-E