Sent: 18-09-2012 13:51:02
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Small Business CGT Concessions
This week I'd like to talk about an aspect of the Small Business CGT Concessions.
In particular I'd like to refer to a Private Binding Ruling which was published on the ATO's PBR register on 8 August 2012.
The particular PBR is number 1012220933984.
The ruling says that in the 2009/10 financial year, the taxpayer sold the goodwill of their business for family reasons and elected to use the CGT small business rollover rule (which enables a taxpayer to purchase another business asset without incurring CGT when the original asset is sold).
In normal circumstances this rollover provision has to be accessed within 2 years but the legislation allows the ATO to grant a longer time-frame.
The taxpayer has asked the ATO for an additional 18 months - that is, a total of 3 years, 6 months.
The ATO told the taxpayer that in order to extend the allowable time it needed to consider all of the following:
- Is there an acceptable explanation why the request was made and would it be fair and equitable to provide the extension?
- Account must be had to the prejudice that the ATO might suffer if the extension was granted
- Is there a potential that people, other than the ATO, or established practices will be unsettled?
- Consideration of people in similar circumstances and the wider public interest
- Whether any mischief is involved in the application
- The consequences of allowing the extension
In a nutshell the ATO wanted, at the very least, to see if there were circumstances beyond the taxpayer's control as to why they didn't find a replacement asset within the standard 2 year time-frame.
The taxpayer's sole excuse - according to the published PBR - is "family commitments" which the ATO rejected as an acceptable excuse. The ATO said this was "purely a personal and private decision ... and you have not provided any circumstances beyond your control that prevented you from acquiring a replacement asset."
It's clear that if you intend to apply for these types of extensions you need to provide a very good reason.
On another issue some of you might be wondering about my book. I'm happy to say that my book has been updated and has been published by Thompson Reuters as 'The Essential SMSF Guide". The book is now also endorsed by the Institute of Chartered Accountants. Further details are available here:
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