Private ruling: CGT – small business concessions – replacement asset period – extension of time
Date of advice: 12 December 2017
Published: April 2018
Ruling period: Year ending 30 June 2018 | Year ending 30 June 2019
Date scheme commenced: 1 July 2017

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 to XX December 20XX? | A1: Yes

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 December 20XX. You have considered a number of potential replacement assets within the replacement period, however the assets considered did not match your business needs. You are currently completing due diligence on a potential replacement asset, however an acquisition has not been made within the replacement period. You are continuing to look for a suitable replacement asset which is within your price range and matches your business needs.

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

Reasons for decision: Summary: In order to apply the small business rollover, a replacement asset must be acquired within two years after the relevant CGT event. However the Commissioner may extend the replacement asset period in certain circumstances (subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997)). The relevant factors in determining whether to extend the replacement asset period are: ● there should be evidence of an acceptable explanation for the period of extension requested and that it would be fair and equitable in the circumstances to provide such an extension ● account must be had to any prejudice to the Commissioner which may result from the additional time being allowed, however the mere absence of prejudice is not enough to justify the granting of an extension ● account must be had of any unsettling of people, other than the Commissioner, or of established practices ● there must be a consideration of fairness to people in like positions and the wider public interest ● whether there is any mischief involved ● a consideration of the consequences. You rolled over a capital gain under the small business rollover during the 20XX-XX financial year. You have been unable to acquire a suitable replacement asset within the replacement period. You have however, considered the purchase of a number of properties. We consider that you have made ongoing efforts to acquire a replacement asset. Having considered the relevant factors above, and the particular circumstances of your case, the Commissioner has applied his discretion and will extend the asset replacement period to XX December 20XX.

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