Private ruling: Capital gains tax - small business concessions
Date of advice: 7 September 2020
Published: October 2020
Ruling period: Year ended 30 June 2021 | Year ended 30 June 2022
Date scheme commenced: 1 July 2020

Ruling: Q1: Will the Commissioner exercise the discretion to extend the replacement asset period to the specified date? | A1: Yes. Having regard to your full circumstances, the Commissioner considers it would be fair and equitable to extend the replacement asset period to the specified date. Further information on the small business rollover can be found on by searching 'QC52291' on ato.gov.au.

Relevant facts and circumstances: The Trust disposed of an active asset and generated a capital gain. The trustee is the sole trustee for trust. The trust satisfied the basic conditions for relief under Division 152 of the Income Tax Assessment Act 1997 (ITAA 1997). The trust was eligible for and applied the small business concessions as part of preparing and lodging the 20## income tax return. After applying the discount and then the small business concessions, there was a residual capital gain. The trust made the choice and applied the replacement asset small business rollover concession to the residual capital gain. After the sale transaction was completed, there were additional issues that needed to be reviewed and addressed by the trustee. All the identified issues were finally resolved satisfactorily as between the parties. The above additional issues meant the retention payment under the sale contractual arrangements were retained by the purchaser. While the post-sale dispute was being resolved this impacted on the opportunity to properly progress the acquisition of a replacement active asset. The trustee engaged with expert advisers in sourcing opportunities for the trustee. The trustee has been looking on business sale websites and networking with fellow entrepreneurs who have also sold their businesses to identify opportunities to jointly purchase/invest. However, the trusts ability to acquire a replacement asset has been significantly impacted upon and severely limited as a consequence of the COVID 19 outbreak.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-190(2) | Income Tax Assessment Act 1997 Subdivision 152-E