Small Business Concessions: extension of time to dispose of an active asset to qualify for the small business retirement exemption

Will the Commissioner extend the period of time under subparagraph 152-35(a)(ii) of the Income Tax Assessment Act 1997 (ITAA 1997) within which the taxpayer can dispose of an active asset in order to obtain the small business retirement exemption?

Yes. The Commissioner's will extend the period of time under subparagraph 152-35(a)(ii) of the ITAA 1997 to dispose of the asset.

The taxpayer's business ceased operations and arrangements were made to dispose of an active asset of the business within 12 months. However a number of matters had to be dealt with in relation to one of the assets before it was legally able to be sold. These matters took in excess of 12 months to be finalised. The taxpayer did everything necessary to deal with these matters in a timely way in order to facilitate a sale of the asset at the earliest possible time.

The finalisation of the legal requirements was a prerequisite to the sale of the asset. The nature of the work to be undertaken led to a delay in the completion of the matters and was not due to any action on the taxpayer's part. The taxpayer did everything to dispose of the asset as early as possible. It was due to the nature of the work and the unavoidable circumstances beyond the taxpayer's control that the disposal of the asset was delayed for more than 12 months. It is therefore considered reasonable to grant the extension of time for the asset to be treated as an active asset under subparagraph 152-35(a)(ii) of the ITAA 1997.