Taxation Determination

TD 2007/14A2 - Addendum

Income tax: capital gains: small business concessions: what 'liabilities' are included in the calculation of the 'net value of the CGT assets' of an entity in the context of subsection 152-20(1) of the Income Tax Assessment Act 1997?

Addendum

This Addendum is a public ruling for the purposes of the Taxation Administration Act 1953. It amends Taxation Determination TD 2007/14 to reflect changes in the law as set out below.

For CGT events happening in the 2007-08 income year or later income years

Taxation Laws Amendment (Small Business) Act 2007:

·
increased the maximum net asset value test threshold in section 152-15 of the Income Tax Assessment Act 1997 (ITAA 1997) from $5 million to $6 million,
·
replaced the term 'small business CGT affiliate' with 'affiliate', moved its definition from section 152-25 of the ITAA 1997 to section 328-130 of the ITAA 1997 and changed its meaning in some respects, and
·
enacted the small business entity ($2 million turnover) test as an alternative to the maximum net asset value test as a means of qualifying for the small business capital gains tax concessions.

TD 2007/14 is amended as follows:

1. Paragraph 5

(a) In the second column of the calculation, against the item 'Freehold premises in Parramatta', omit '3,500,000'; substitute '4,500,000'.

(b) In the third column of the calculation against the item 'Freehold premises in Penrith', omit '6,300,000'; substitute '7,300,000' and against the item ' Net value of CGT assets: ' omit '4,800,000'; substitute '5,800,000'.

2. Paragraph 8

In the fourth sentence omit '$5 million'; substitute '$6 million'.

3. Paragraph 11

In the second sentence of the paragraph, omit 'small business CGT'.

4. Paragraph 12

Omit the calculation; substitute:

Net value of CGT assets of Cassandra $1.0m
Net value of CGT assets of Fancy Foot Pty Ltd - Studio: ($6m less $0.5m) $5.5m
Net value of CGT assets of Wanadance Pty Ltd - Warehouse: ($2m less $2.8m) ($0.8m)
Total net value of CGT assets: $5.7m

5. Paragraph 13

In the first sentence omit '$5 million'; substitute '$6 million'.

6. Paragraph 15

Omit the paragraph; substitute:


15. To qualify for the small business CGT concessions, at least one of the conditions in paragraph 152-10(1)(c) must be satisfied. One of these conditions is the maximum net asset value test in section 152-15. Under this test, the net value of the CGT assets of the taxpayer and certain related entities must not exceed $6 million just before the relevant CGT event.

7. Legislative references

Insert

-
ITAA 1997 152-25
-
ITAA 1997 328-130
-
Taxation Laws Amendment (Small Business) Act 2007

This Addendum applies to CGT events happening in the 2007-08 income year or later income years.

Commissioner of Taxation
15 April 2014

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References

ATO references:
NO 1-2NIWPML

ISSN: 1038-8982