Private ruling: Capital gains tax - extension of time to make a choice for the retirement exemption to apply
Date of advice: 31 May 2019
Published: July 2019
Ruling period: Year ending 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Will the Commissioner exercise his discretion under paragraph 103-25(1)(b) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow an entity extension of time to XX/XX/XXXX to make a choice to apply the small business retirement exemption contained in Division 152-D of the ITAA 1997? | A1: Yes Having considered entity's circumstances and the relevant factors, the Commissioner is able to apply his discretion under paragraph 103-25(1)(b) of the ITAA 1997 and allow an extension of time to make the choice to apply the small business retirement exemption.

Relevant facts and circumstances: An asset was sold by an entity. A capital gain was made on the sale of the asset. The entity lodged a tax return of the XX/XX/20XX income year and applied the Small Business 50% Active Asset Reduction Small Business and Small Business Rollover to reduce the gain to nil. A replacement asset was not purchased by XX/XX/20XX being the end of the two year period after the sale of the asset. Therefore, CGT event J5 was triggered for the financial year ended 30 June 20XX. On XX/XXXX/20XX a tax return was lodged by your tax agent. Due to a lodgement error, the capital gains tax event was not recorded in the entity's 20XX tax return. You did not make a choice in writing to apply the retirement exemption.

Relevant legislative provisions: Income Tax Assessment Act 1997 paragraph 103-25(1)(b)