Private ruling: Capital gains tax -small business concession stakeholders
Date of advice: 8 December 2015
Published: February 2016
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Will the Commissioner exercise his discretion contained in subsection 152-125(4) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the 2 year time limit that would ordinarily apply to payments from the entity to its CGT concession stakeholders to a period of X years and X months in order to accommodate the extended finance arrangement granted by the entity to the purchaser? | A1: Yes.

Relevant facts and circumstances: The entity was issued with a private ruling decision and the following was included in the ruling: Under the sale agreement, entity agreed to lend back to the purchaser the sum of $XX from the sale proceeds. The $XX was withheld from the sale proceeds at settlement for these purposes. The loan is for a period of X years. The entity received a payment from the purchaser as the period for the original loan expired. The purchaser requested a further X period in which to repay the remaining balance of the loan to the company. The company and the purchaser agreed to extend the term of the loan for a further X period, at which time the purchaser is to pay the remaining balance of the loan to the entity. The company will not be in a position as a result of the extension to the loan to make payments to its CGT concession stakeholders of the full exempt amount before the expiry of original loan period


Reasons for decision: Summary: The Commissioner may exercise his discretion under section 152-125(4) of the ITAA 1997 and allow further time to make payments to the concessional stakeholder. Factors to be considered include: • there should be evidence of an acceptable explanation for the period of time requested and 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; • account must be had of any unsettling of people, other than the Commissioner, or of established practices; • there must be consideration of fairness between you and other people in like positions and the wider public interest; • whether there was any mischief involved; and • consideration of the consequences. Having considered the relevant facts and the entity request, the Commissioner is able to apply his discretion under subsection 152-125(4) of the ITAA 1997 and allow an extension to the two year time limit to a period of X years and X months.

Relevant legislative provision: Income Tax Assessment Act 1997 - subsection 152-125(4)