Private ruling: Capital gains tax
Published: July 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Will the Commissioner exercise his discretion under subsection 124-75(3) of the ITAA 1997 to extend the time required to obtain a replacement asset for a compulsorily acquired asset? | A1: Yes.

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. The council published a Notice of Acquisition and acquired the property in early 20XX. The valuation and offer amount was disputed. Further negotiations were undertaken with the council but were unsuccessful. Mediation was undertaken. The mediation process was resolved mid 20YY.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 124-B. | Income Tax Assessment Act 1997 subsection 124-75(3).

Reasons for decision: Summary: Subdivision 124-B of the Income Tax Assessment Act 1997 (ITAA 1997) explains the circumstances when a rollover is available for an asset that is compulsorily acquired, lost or destroyed. If you receive money as a result of the compulsory acquisition, you can only choose a rollover if you incur expenditure in acquiring another CGT asset. Under subsection 124-75(3) of the ITAA 1997, you must incur at least some of the expenditure no earlier than one year before the event happens or, within one year after the end of the income year in which the event happens. This period may be extended in special circumstances as outlined in the following example in Taxation Determination TD 2000/40: Graeme had a commercial property compulsorily acquired by a State authority. Graeme is having a protracted legal dispute with the authority over the quantum of the compensation. On these facts, we would accept that there are special circumstances to allow further time. Your case is similar to the example provided in TD 2000/40 in that there has been an ongoing legal dispute with the council over the quantum of compensation you received. Taking your full circumstances and the above principles into account, the Commissioner will allow an extension of time.