Private ruling: CGT – small business concessions – rollover – EOT replacement asset
Date of advice: 2 March 2019
Published: May 2019
Ruling period: Year ended 30 June 2018 | Year ended 30 June 2019 | Year ended 30 June 2020
Date scheme commenced: 1 July 2017

Ruling: Q1: Will the Commissioner exerc ise his discretion under subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow an extension to the replacement asset period to XX December 20XX? | A1: Yes The small business rollover allows you to defer the capital gain made from a Capital Gains Tax (CGT) event if you acquire one or more replacement assets and satisfy certain conditions. The conditions which must be met to obtain relief are set out in Subdivision 152-A of the ITAA 1997. For you to obtain a rollover, subsection 104-185(1) of the ITAA 1997 requires you to acquire a replacement asset within a period starting one year before, and ending two years after the date of disposal of the original asset. Subsection 104-190(2) of the ITAA 1997 states that the Commissioner may exercise his discretion to extend those time limits. After, reviewing the facts of your situation, the Commissioner will apply his discretion under subsection 104-190(2) of the ITAA 1997 and allow the extension of time.

Relevant facts and circumstances: In the 20XX-XX financial year you elected to use the small business rollover to defer capital gains that you made. The date of the capital gains tax (CGT) event was XX July 20XX. On XX November 20XX you changed tax agents and were advised of the rollover requirement to acquire a replacement asset within two years after the date of disposal of the original asset. You have found a potential replacement asset and are currently in negotiations for the purchase of this asset. You expect to sign a contract before the end of the 20XX-XX financial year. Due to the industry in which your business operates, once the contract is signed you will be required to apply to be an approved provider. The application process is expected to take 2-3 months.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 152-A | Income Tax Assessment Act 1997 subsection 104-185(1) | Income Tax Assessment Act 1997 subsection 104-190(2)