Private ruling: Income tax – extension to the replacement asset period
Date of advice: 30 August 2018
Published: October 2018
Ruling period: Year ending 30 June 2019
Date scheme commenced: 28 July 2018

Ruling: Q1: Will the Commissioner extend the replacement asset period to 30 June 2019? | A1: Yes. Having regards to your particular circumstances and the relevant factors the Commissioner considers it appropriate to grant an extension of the replacement asset period.

Relevant facts and circumstances: In July 20XX The Trust executed a share sale agreement disposing of an active asset. The Trust applied the general CGT discount, the active asset 50% reduction and the retirement exemption to the gain. The remaining gain of $XXX was rollover under the replacement asset rollover concession. Taxpayer A (you) is the sole director of the corporate trustee for the trust. Due to circumstances outside of your control the trust has been unable to acquire a replacement within the replacement asset period which ended on X July 20XX. In May 20XX you engaged X to conduct a due diligence audit for a group of companies based in X with the view of purchasing the group to comply with the small business roll-over concession. You did not proceed with the acquisition due to unfavourable due diligence audit results. In April 20XX you instructed X to communicate an offer through to a vendor’s business broker to acquire a company specialising. This was subject to a satisfactory completion of a formal due diligence process. You transferred a 5% deposit to the vendor’s solicitors trust account. A due diligence report was issues in June 20XX and a Share Sale Agreement was forwarded to the vendor’s solicitor. After further negotiation’s a second agreement was provided to the solicitor on XX July 20XX. On XX July 20XX your business broker received a phone call advising that the vendor was considering not proceeding with the sale due to two clauses in the sale contract. The business sale discussions continued throughout the day and the vendor was assured that the clauses in question would be amended to address any concerns. You solicitor amended the Share Sale Agreement as requested by the vendor and forwarded it to the vendor’s solicitor for further review and comments on XX July 20XX. At this point you believe that the purchase of this company is high likely not to proceed, you intend to initiate the purchase of another security company.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 104-190(2)