Private ruling: Capital gains tax - replacement asset extension of time
Date of advice: 17 November 2020
Published: January 2021
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20YY

Ruling: Q1: Will the Commissioner exercise his discretion under section 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the replacement asset period? | A1: Yes. Having considered your circumstances and the relevant factors the Commissioner considers it appropriate to grant an extension of the replacement asset period.

Relevant facts and circumstances: You sold your previous business in month/20XX. A business you started and built over a period of more than XX years which resulted in CGT event after applying the 50% discount for holding the business more than 12 months and the active asset. You also applied the CGT replacement asset rollover. You request a further 12 month extension to purchase the replacement active asset due to a number of medical, financial, personal and pandemic related reasons.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-190

Reasons for decision: Detailed Reasoning - Commissioners Discretion: Subsection 104-190(2) of the ITAA 1997 grants the Commissioner the power to extend the replacement asset period. In determining if the discretion to extend the replacement asset period should be exercised, the Commissioner considers the following factors: • whether there is evidence of an acceptable explanation for the period of extension requested and whether it would be fair and equitable in the circumstances to provide such an extension • whether there is any prejudice to the Commissioner if the additional time is allowed, however the mere absence of prejudice is not enough to justify the granting of an extension • whether there is any unsettling of people, other than the Commissioner, or of established practices • fairness to people in like positions and the wider public interest • whether there is any mischief involved, and • the consequences of the decision. In prior cases, the Commissioner has granted an extension of time where there have been special circumstances and an acceptable explanation for the period of extension requested. These can include, but are not limited to medical or financial issues, personal issues or natural disasters. Given your personal, financial and medical issues in recent years, the Commissioner will allow you a further 12 months to acquire another business and so replace the CGT asset subject of the rollover.