Private ruling: Capital gains tax - small business concession
Date of advice: 14 October 2017
Published: March 2018
Ruling period: 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Will the Commissioner exercise the discretion under subsection 104-190(2) of the Income Tax Assessment Act 1997 (ITAA 1997) and allow an extension of time until June 20XX? | A1: Yes Having considered your circumstances and the acceptable explanation provided, the Commissioner considers it would be fair and equitable to apply his discretion under subsection 104-190(2) of the ITAA 1997 and allow an extension of time until June 20XX. The extension will allow the new asset to be considered a replacement asset for the purposes of section 104-185 of the ITAA 1997. Allowing an extension is not prejudicial to the Commissioner in this case nor is it unfair to other people in similar positions. Further information on the small business rollover can be found on our website ato.gov.au and entering Quick Code QC52291 into the search bar at the top right of the page.

Relevant facts and circumstances: You sold a franchise business in October 20XX and made a capital gain. You satisfy the basic conditions for the small business CGT concessions. In the income tax period ending 30 June 20XX, you elected to utilise the small business CGT rollover concession. Under this concession you are required to acquire a replacement asset within the two years, you commenced this process in 20XX and acquired a new franchise business to operate. You intended to operate this new franchise business in a prime location within a shopping centre that was being extended. This new extension was to be completed in July 20XX. The landlord of this new construction delayed the build by negotiating with a new tenant, extending the completion date to July 20XX. This negotiation was outside of your control and you ceased this business opportunity. You immediately commenced looking for another business opportunity and in May 20XX, this was secured by way of another franchise business. This will be the first franchise for this company in this area. You have paid an initial deposit and are currently waiting to finalise this franchise agreement. You anticipate this new business to be opened and operational by March 20XX.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-190.


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