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Edited version of private advice
Authorisation Number: 1051577263267
Date of advice: 11 September 2019
Ruling
Subject: CGT concessions - retirement exemption
Question 1
Does the Trust satisfy the basic conditions to apply the CGT small business concession on the sale of the Property?
Answer
Yes.
The Trust satisfies the basic conditions for the following reasons. A CGT event will happen in relation to a CGT asset of the Trusts that will result in a gain. Additionally the maximum net asset value is less than $6 million. The Trust also satisfies the conditions of the active asset test as the property has been used by an entity connected with the Trust in their business. Further information on the basic conditions can be found by searching 'QC 44192' on ato.gov.au
Question 2
Can the Trust reduce the capital gain made on the disposal the Property by applying the small business retirement exemption?
Answer
Yes.
In this case the Trust satisfies the basic conditions. It is eligible to reduce its gain by applying the small business retirement exemption up to its CGT Concession Stakeholder/s life time limit of $500,000. If they are under 55 years old at the time you make the choice the Trust must make a personal contribution equal to the exempt amount into a complying superannuation fund or retirement savings account, the CGT Concession stakeholder must also keep a record of the amount they choose to disregard. Further information can be found by searching 'QC 52290' on ato.gov.au
This ruling applies for the following periods:
Year ended 30 June 2018
The scheme commences on:
1 July 2017
Relevant facts and circumstances
The Trust was established in 20xx via a trust deed.
The trustee of the Trust is an Australian company established in 20YY.
It is an Australian unit trust for income tax purposes.
The unit holders are FT1, xxx units, and FT2, xxx units.
Both of the unit holders are discretionary trusts.
The unit holders of the Trust have rights to distributions of income and capital of the Trust when made presently entitled.
The main beneficiaries of both trusts are directors and shareholders of the Trustee.
The key decision makers in relation to the affairs FT1 and FT2 are the same key decision makers in relation to the business affairs on the Trust and its related entities, in particular OS.
OS is owned by FT1 and FT2.
The Trust has disposed of an investment property in 20YY.
It was sold for about $xx.
The investment property was used for OS's head office.
The purchase price of the investment property was $xx in 20YY.
The annual turnover of the trust and its related entities over the recent financial years are well in excess of $2M.
The retirement exemption has not been previously utilised by any of the relevant individuals.
There are multiple entities in the group.
The net value of the assets within the group is less than $6 million.
The Trust will make a payment to the CGT concession stakeholders in relation to the capital gain made by the Trust
Relevant legislative provisions
Income Tax Assessment Act 1997 section 152-10
Income Tax Assessment Act 1997 section 152-40
Income Tax Assessment Act 1997 subsection 328-125(2)
Income Tax Assessment Act 1997 subsection 328-125(4)
Income Tax Assessment Act 1997 subsection 152-35(1)
Income Tax Assessment Act 1997 subsection 152-40(4)
Income Tax Assessment Act 1997 Subdivision 152-D
Income Tax Assessment Act 1997 subsection 152-305(2)
Income Tax Assessment Act 1997 section 152-55
Income Tax Assessment Act 1997 section 152-70
Income Tax Assessment Act 1997 section 152-60
Income Tax Assessment Act 1997 section 152-320
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