Private ruling: CGT - SBC - extension of time to purchase a replacement asset
Published: August 2014
Ruling period: Year ending 30 June 2015
Date scheme commenced: 1 July 2014

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? | A1: Yes

Relevant facts and circumstances: You disposed of an interest in a CGT asset and incurred a capital gain on disposal. Your intention was to purchase another asset within the required two year period. You have not been successful in your search for a replacement asset to date. This has been due to lack of suitable assets on the market. You have already reviewed a number of assets for their suitability. You are currently reviewing an asset which is a serious contender. A Due Diligence Review of this business is currently being undertaken. You have requested a 12 month extension to the replacement asset period.

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

Reasons for decision: Summary: Where a taxpayer elects to take advantage of the small business rollover, there are rollover conditions that must be satisfied by the end of the replacement asset period. This period starts one year before and ends two years after the last CGT event that occurs in the income year for which you choose the rollover. However the Commissioner may extend the replacement asset period in certain circumstances (subsection 104-190(2) of the Income Tax Assessment Act 199 7). 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 for a CGT. You have been searching for a suitable replacement asset; however there has been a lack of suitable properties coming onto the market. 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 for 12 months.