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Edited version of your private ruling
Authorisation Number: 1012465651450
Ruling
Subject: CGT - Small Business 15 year exemption
Question 1
Are you entitled to the small business 15 year exemption?
Answer
Yes
This ruling applies for the following periods
Year ended 30 June 2012
The scheme commenced on
1 July 2011
Relevant facts and circumstances
You purchased the property in 19XX.
You operated a business from the property for many years.
You are over the age of XX and retiring.
You satisfy the maximum net asset value test.
You are a self-funded retiree, and intend to use the funds from the sale of the property to cover your financial requirements in retirement.
You experienced difficulty in selling the property when you put the property on the market in 20XX.
In 20YY you subdivided the property and sold the portion of the land that included your family home.
The remaining portion of land is subject to a Contract for Sale dated year ended 30 June 20XX, with settlement scheduled for year ended 30 June 20YY.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 152-10
Income Tax Assessment Act 1997 Section 152-105
Reasons for decision
Detailed reasoning
To qualify for the small business capital gains tax (CGT) concessions, you must satisfy several conditions that are common to all the concessions. These are called the 'basic conditions'. Each concession also has further requirements that you must satisfy for the concession to apply.
The Advanced guide to capital gains tax concessions for small business 2010-11 (NAT 3359) provides a detailed explanation of the conditions for each concession.
Basic Conditions
In your case, it is accepted that you meet the basic conditions due to the following:
· a CGT event will occur when you dispose of the property
· the event will result in a gain
· you satisfy the maximum net asset value test
· the property meets the active asset test as you have held the property for more than 15 years and you used it in your cattle farming business for more than 7.5 years.
· Small business 15 year exemption
To be eligible for the small business 15 year exemption you must satisfy the basic conditions and two further conditions:
· you continuously owned the CGT asset for the 15-year period ending just before the CGT event happened; and
· you are:
at least 55 years old at that time and the event happened in connection with your retirement
From the information supplied, you will be over 55 years of age at the time of the disposal of the property, and it is your intention to use the funds from the sale of the property to fund your retirement. Accordingly, you are entitled to the small business 15 year exemption and can entirely disregard the capital gain on the sale of your property. You do not need to apply any other concessions.
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