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Edited version of your private ruling
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Ruling
Subject: Active asset test
Question
Do the boarding houses satisfy the active asset test?
Answer
Yes.
This ruling applies for the following periods:
Year ended 30 June 2013
Year ended 30 June 2014
The scheme commences on:
1 July 2012
Relevant facts and circumstances
The boarding houses were purchased by you less than 15 years ago. A private ruling, was issued advising you that the assts were active from date of purchase until 30 June 2012.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 152-40.
Reasons for decision
According to the Advanced guide to capital gains tax for small business concessions 2010-11, to qualify for the small business concessions you must satisfy the basic conditions. One of the basic conditions requires the CGT asset to satisfy the active asset test. To meet this test, a CGT asset must be an active asset for either, 7.5 years if you have owned it for more than 15 years or half of the test period if you have owed it for 15 years or less.
The test period begins when you acquire the asset and ends at the earlier of the time of the CGT event, or when the business ceases.
In your case you have owned the CGT asset for less than 15 years. The asset has been active for the entire period of ownership, which is more than half of the test period. Therefore, the CGT asset is considered an active asset.
Additional information
To be eligible for the small business concessions, there are a number of conditions that need to be met besides the active asset test. This ruling has not considered these other conditions. For more information see the publication Advanced guide to capital gains tax concessions for small business 2010-11 (NAT 3359), which is available on our website www.ato.gov.au.
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