ATO Interpretative Decision

ATO ID 2001/51 (Withdrawn)

Income Tax

• This ATO ID is withdrawn as it does not clearly express the ATO view on this issue.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Does small business roll-over relief under Division 17A of Part IIIA of the Income Tax Assessment Act 1936 apply to the sale of a farm?

Decision

Small business roll-over relief under Division 17A of Part IIIA of the Income Tax Assessment Act 1936 applies to the sale of the original farm.

Facts

A farm is purchased in the 1980s. From that time on, the farm is used actively in a business of primary production. The farm is sold after 1 July 1997. No part of the farm had been part of another small business rollover in the previous five years. A new farm is purchased one year later and used from this time actively in a business of primary production. The net value of the taxpayer's assets is less than $5,000,000.

Reasons For Decision

Division 17A of the Income Tax Assessment Act 1936 confers optional rollover relief in relation to the disposal on or after 1 July 1997 of certain business related assets. The selling of the original farm and the purchase of the new farm satisfies all the requirements of Division 17A of the Income Tax Assessment Act 1936:

*

The original farm was sold after 1 July 1997;

*

The original farm was an active asset at the time of the disposal as at this time it was being used by the taxpayer in the course of carrying on a business (subsection 160ZZPQ(1), subsection 160ZZPL(3) of the Income Tax Assessment Act 1936);

*

The new farm was purchased within the period beginning one year before and ending two years after the disposal of the original farm and was then used as an active asset (subsection 160ZZPT(1) of the Income Tax Assessment Act 1936);

*

The original farm was used as an active asset for more than one-half of the period in which the farm was owned by the taxpayer (paragraph 160ZZPQ(1)(d) of the Income Tax Assessment Act 1936);

*

No part of the original farm was subject to rollover under Division 17A within the five years prior to its disposal (paragraph 160ZZPQ(1)(e) of the Income Tax Assessment Act 1936); and

The net value of the taxpayer's assets is less than $5,000,000 (subsection 160ZZPP(2) of the Income Tax Assessment Act 1936).

Legislative References:
Income Tax Assessment Act 1936
   subsection 160ZZPP(2)
   subsection 160ZZPQ(1)
   subsection 160ZZPL(3)
   subsection 160ZZPT(1)

Keywords
Capital gains tax
CGT rollover relief

Business Line:  Small Business/Individual Taxpayers

Date of publication:  4 June 2001

ISSN: 1445-2782