Private ruling: CGT – Small business concessions – replacement asset period
Date of advice: 23 February 2019
Published: May 2019
Ruling period: Year ending 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Will the Commissioner exercise his discretion under subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the replacement asset period? | A1: Yes Having considered the relevant factors, and the particular circumstances of your case, the Commissioner will apply his discretion to extend the replacement asset period. Further information on the relevant factors can be obtained by searching ‘QC 18383’ on ato.gov.au . | Q2: Will capital gains tax (CGT) event J5 occur in the 2018-19 financial year? | A2: No As the Commissioner has extended the replacement asset period, your acquisition of the replacement land will prevent CGT event J5 occurring in relation to the portion of the capital gain that you applied the small business rollover to. Note: If there is a future change to the use of the replacement land, CGT event J2 may occur. Further information can be obtained by searching ‘QC 52291’ on ato.gov.au .

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. You owned land (the land) and exchanged contracts during the 2016-17 financial year for the sale of the land. The land satisfied the basic conditions of Subdivision 152-A of the ITAA 1997 qualifying for the capital gains tax (CGT) small business concessions. You elected to apply relief available under the small business rollover (contained in Subdivision 152-E of the ITAA 1997) to a portion of the capital gain that resulted from the sale of the land. You intended to source new land within the replacement asset period to facilitate the expansion of your business. Due to various factors, this process took longer than expected. You exchanged contracts for the purchase of new primary production land. Prior to settlement, you were approached by the selling agent and advised that a more suitable property had become available and that the under bidder was prepared to exchange on the land at no detriment to the vendor. You rescinded the contract previously exchanged and entered into a new contract for the alternative land (replacement land), which subsequently settled. The contract for the purchase of the replacement land was entered into more than two years after you disposed of the land. The replacement land satisfies the conditions set out in subsection 104-197(2) of the ITAA 1997 and was of sufficient value to avoid triggering CGT Event J6 (section 104-198 of the ITAA 1997).

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 104-190 | Income Tax Assessment Act 1997 Section 104-197