Private ruling: CGT - SBC - extension of time for a replacement asset
Date of advice: 24 March 2016
Published: May 2016
Ruling period: Year ended 30 June 2014 | Year ended 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017
Date scheme commenced: 1 July 2013

Ruling: Q1: Will the Commissioner exercise his discretion under subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the replacement asset period? | A1: Yes.

Relevant facts and circumstances: You made a capital gain and elected to take advantage of the small business rollover. You have started a new business, following a six month business research and strategy phase, after the sale of your previous business. You require additional time to review your business to ascertain what funds or capital commitment would be required.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 104-190(2).

Reasons for decision: Summary: In order to apply the small business rollover, a replacement asset must be acquired within two years after the relevant CGT event. However the Commissioner may extend the replacement asset period in certain circumstances (subsection 104-190(2) of the Income Tax Assessment Act 199 7). The relevant factors in determining whether to extend the replacement asset period are: • 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 there is any mischief involved • a consideration of the consequences. You disposed of your business. You have since established a new business however you have been unable to fully review the new business to ascertain what funds or capital commitment will be needed. We consider that you have made ongoing efforts to acquire a replacement asset. Having considered the relevant factors above, and the particular circumstances of your case, the Commissioner has applied his discretion and will extend the asset replacement period.