Private ruling: Replacement asset rollover
Published: May 2015
Ruling period: Year ending 30 June 2016
Date scheme commenced: The scheme has commenced

Ruling: Q1: Will the Commissioner exercise his discretion under subsection 124-75(3) of the ITAA 1997 to extend the time required to obtain a replacement asset for a compulsorily acquired asset? | A1: Yes, until 31 December 20XX.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. The property was compulsorily acquired by an Australian Government agency during the relevant financial year. There was a dispute in relation to the value of the property. The dispute was finalised during the 20XX financial year. The co-director of the trustee company passed away unexpectedly during the 20XX financial year.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 124-75. | Income Tax Assessment Act 1997 Subsection 124-70(1). | Income Tax Assessment Act 1997 Subsection 124-75(3).

Reasons for decision: Summary: Under subsection 124-70(1) of the ITAA 1997 you may be able to choose a roll-over capital gains tax (CGT) asset is compulsorily acquired by an Australian Government agency. If you receive money for the sale of the asset then further conditions are imposed by section 124-75 of the ITAA 1997. Subsection 124-75(3) of the ITAA 1997 requires you to incur expenditure in acquiring another CGT asset no earlier than one year before the disposal happens and no later than one year after the end of the income year in which the disposal happens, or within such further time as the Commissioner allows in special circumstances. Taxation Determination TD 2000/40 provides guidelines as to when the Commissioner will extend the period in which a replacement asset can be acquired in particular, what are special circumstances. Example 3 in TD 2000/40 provides an example of special circumstances including a 'protracted legal dispute with the authority over the quantum of the compensation' and in this instance the Commissioner would allow an extension. In addition, in determining if the discretion would be exercised, the Commissioner will consider the following factors: • 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, and • a consideration of the consequences. | Detailed Reasoning - Application to your circumstances: Based on the information provided, it is accepted that there were special circumstances that delayed your ability to purchase a replacement asset. The Commissioner will exercise his discretion and extend the time the trust has to purchase a replacement asset until 31 December 20XX.