Private ruling: CGT - small business concessions
Published: January 2014
Ruling period: Year ended 30 June 2014 | Year ended 30 June 2015
Date scheme commenced: 1 July 2013

Ruling: Q1: Will the Commissioner exercise the discretion available under section 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to provide you with an extension of time to acquire a replacement asset for the business that you previously owned? | A1: Yes.

Relevant facts and circumstances: You held an interest in a business which you sold in 2011. You elected to defer the capital gain under the small business roll-over concession. Since selling the interest in the business, the Trustees have been looking for a suitable replacement asset. Ever since the sale there has been a number of instances where the Trustees have considered and negotiated the purchase of a replacement asset. There are negotiations currently ongoing.

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) of the ITAA 1997 states that the Commissioner may exercise his discretion to extend those time limits. In determining if the discretion would be exercised the Commissioner has considered the following factors: · 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 · 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 · any unsettling of people, other than the Commissioner, or of established practices · consideration of fairness to people in like positions and the wider public interest · whether there is any mischief involved, and · a consideration of the consequences In your case, you have made continuing efforts to obtain a replacement asset, since the sale of your interest in the business. You are currently in negotiations and allowing an extension is not prejudicial to the Commissioner in this case nor is it unfair to other people in similar positions. Having considered the relevant facts, the Commissioner is able to apply his discretion under subsection 104-190(2) of the ITAA 1997 and allow an extension to the replacement asset period.