Private ruling: Income tax -small business concessions - EOT
Date of advice: 30 June 2020
Published: August 2020
Ruling period: Year ending 30 June 2020 | Year ending 30 June 2021
Date scheme commenced: 1 July 2019

Ruling: Q1: Will the Commissioner exercise his discretion to grant the Trust an extension of the replacement asset period as permitted under subsection 104-190(2) of the ITAA 1997? | 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: On XX July 20XX, the Trust entered into a contract to sell the business assets. As a result of entering into the contract to dispose of the business assets, a CGT event happened from which the Trust made a capital gain. The Trustee applied the small business CGT concessions under Division 152 to reduce the assessable amount of the capital gain it made from the sale of the business assets to nil. One of the concessions the Trustee applied was the small business rollover under subdivision 152-E of the ITAA 1997. Due to the failure of the Business to meet the required conditions within the original timeframe, settlement was delayed until the third-party purchaser was satisfied with the performance of the Business. In this case, the settlement was delayed until XX February 20XX. The delay in the settlement of the Business ultimately occurred because of circumstances outside of the control of the Trust. At the time of the signing of the contract, the Trust had reasonable expectations to be able to achieve the required conditions in the sales contract within the replacement asset period. However, due to the increased competition in the industry in their area, this was not achieved. Because of the delayed settlement, the Trust did not have ready access to the funds to be able to purchase a replacement asset until settlement took place. The Trust is actively looking for a replacement asset. However, due to initially the delayed settlement (thus not having available funds until that time) and now the unprecedented Covid-19 pandemic impacting the market for acquiring replacement assets, the Trust has not yet been in a position to enter into formal negotiations or offers for a replacement asset.

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